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Greetings. Welcome to the Blink Charging Co. Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to your host, Vitalie Stelea, VP of Investor Relations. You may begin.

Thank you, Kelly. Welcome to Blink's third quarter 2023 earnings call. On the line today, we have Brendan Jones, President and CEO; and Michael Rama, Chief Financial Officer. The discussions today 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 discussions may also include forward-looking statements about our expectations. Actual results may be different from those stated, and the most significant factors that could cause actual results to differ are included on Page 2 of the third quarter 2023 earnings deck. Unless otherwise noted, all comparisons are year-over-year. Now, regarding the Investor Relations calendar: Blink will attend the UBS Industrials Summit on the 29th of November in Palm Beach, Florida; and Needham 26th Annual Growth Conference on the 16th of January of 2024. Please follow our announcements for additional investor events in the future. I will now turn the call over to Brendan Jones, President and CEO of Blink Charging. Brendan, please go ahead.

Thanks, Vitalie, and good afternoon, everyone. Thanks for joining us today. We're going to just jump right into the presentation. So, our third quarter performance surpassed our second quarter results to take over the title of the best quarter in the history of Blink. Now, let's put that in the context. The third quarter 2023 consolidated revenue increased more than 150% to $43.4 million as compared to $17.2 million in the third quarter of 2022. Now, this was driven by increased demand for both our products and services as well as Blink's ability to cater to our customers' needs and timelines. We also wanted to note that in the first nine months, Blink has already generated $98 million in revenue, putting us significantly ahead of our full-year 2022 revenue of -- that was $61.1 million. And we still have another quarter of revenues yet to get to. So, these are quite impressive results. And we actually significantly beat a quarter that was our best quarter in the history. So, great job to the team. Now, when we shift and look at our service revenue and they increased by 119% to $6.7 million, charging service revenue increased 207% to $3.9 million compared to $1.3 million in the third quarter of 2022. Now that represents a $2.6 million increase in charging revenue at a 62% gross margin. We also recorded a 36% increase in network fees to $2 million for the quarter. Our network fees are recurring by nature and represent a reliable high-margin revenue stream as we continue to build the foundation for our continued growth. Blink company-wide margin in the third quarter of 2023 was 29.5% or $12.8 million. On a year-over-year basis and in absolute dollar terms, this represents an increase of $8.3 million in gross profit in Q3. This gross margin and profit increase demonstrates our success in increasing service revenues, managing our manufacturing costs and expenses, and of course, selling more chargers. Scaling our business is key to unlocking further margin expansion as we move forward. Now, we contracted, sold, or deployed 5,965 chargers globally in the third quarter. Notably, we are seeing a long-term trend with increased sales of our DC Fast Chargers as they grow to a larger proportion of our revenue mix. To give you some additional context around that, Blink chargers dispersed approximately 16.2 gigawatts of energy across all Blink's networks globally. Now, as a reminder, when we look at the Blink network, gigawatts dispersed via Blink's own and operated network model comes at a lower cost versus our competitors due to the predominant L2 nature of these installations, which requires significantly lower CapEx investment and the operating expense is greatly reduced as well. To date, in 2023, we have two record-breaking quarters with Q3 2023 representing Blink's strongest revenue quarter in the history of the company. Last quarter, we used the word "momentum" to describe our tremendous progress in 2023, and that description of our business trajectory remains on point. As we move through the close of this year, we are focused on increasing that momentum and the pace we've gathered to drive our continued growth and financial progress. Now, let's jump over to Slide 5. You will see on Slide 5 that we are increasing our revenue target for the end of the year. We are now targeting revenue between $128 million and $133 million versus our previous target of $110 million to $120 million. This new target is based on our current marketplace visibility, our pipeline, and our backlog of sales. Additionally, we would like to reiterate our full 2023 gross margin target of 30%-plus with some expected margin accretion into 2024. If we jump over to Slide 6 now, with our second consecutive quarter of record results, we are reconfirming our commitment to targeting a positive adjusted EBITDA run rate by December 2024. We believe our achievements this quarter directly reflect the success of synergies, the vertical integration we've been doing, pro-active cost saving actions, comprehensive product portfolio, and positive trends in our revenue backlog. Importantly, these factors will continue to provide us with tailwinds as we go into 2024. On Slide 7, we are able to scale our revenue and achieve higher gross margin because Blink is the only [fully-vertegrated] (ph), U.S.-based, full-service EV infrastructure provider, and we've said this many, many times. As such, we design and manufacture our charging equipment and we manage our own network. This allows us to provide a full suite of capabilities to customers who want to either own their own chargers and subscribe to our network and also to site hosts that want us to own and operate the chargers on their land and hybrids in between that with our hybrid model. Our ability to provide flexible models is a unique component of our business and it provides us with a competitive advantage over other companies. On Blink's network, we upgraded it last year, and that upgrade continues to drive growth for the company. In the third quarter, we saw a lower maintenance requirement and lower ongoing cost when compared to legacy networks and other competing networks that are more fragmented. During the last couple of months of 2023, we will continue to integrate the remaining networks in the UK and Europe, generating additional operating savings as we move through 2024. Our record quarter is evident that our business model and our disciplined plan to achieve continuous improvement are working. We employ what we call a holistic approach to executing our growth initiative by combining market analysis with a careful evaluation of industry data and EV charging trends to identify our path forward as we drive towards profitability. Next on Slide 8, you can see the long-term forecasted growth for electric vehicles and EV chargers globally. As we stated before, we believe that the charging landscape is tremendously underserved. It is anticipated that there will be a need for up to 490 million chargers by 2040 globally, representing growth over 30 times the current level today. Blink has the team and technology to play a significant role in leading this expansion and gaining our fair share of them, or unfair share, I should say, of the market. If you move now to Slide 9, we provide some context here around the significant opportunity of the ongoing transition to EVs globally. Through September of 2023, EVs grew to 8% of new car sales sold in the United States. In California, 22% of all new cars were EVs, with Washington and Oregon trailing right behind that. In October, the percentage of new vehicle shoppers very likely to consider a full battery electric vehicle reached an all-time high of 29.2%. Now, on a worldwide basis, consumers spent approximately $400 billion on EVs in 2022. There are over 40 EV models available in the U.S. currently, with 75 more coming to the market between 2024 and 2030. The United States alone is expected to add 1 million new EVs to its road by the end of this year and, thus far, they're on target. And many fleets prefer EVs over internal combustion engines because they save about 30% on the total cost of ownership. Globally, and this is a big number here, OEMs committed to over $600 billion in total EV investments from 2023 to 2027, with most of those investments made five years in advance of production. So, despite various industry reports, we expect the EV market to continue to grow and we view competition as a positive catalyst for EV consumers in the U.S. and globally. It's simple, the more EVs that are produced and deployed, the cheaper they become to own and operate, significantly benefiting Blink and the entire EV infrastructure market. Moving on now to Slide 10, charger installations are projected to grow to over 30 million chargers by 2030 and to over 90 million chargers by 2040, equating to approximately $100 billion investment by 2040. It's also important to note that 30 million number is based on a 35% EV penetration rate. Especially notable, according to McKinsey, PricewaterhouseCoopers, Bloomberg New Energy Finance, over 90% of new chargers are forecasted to be Level 2 chargers, creating another immense opportunity for Blink. And to remind you, Blink can provide and support both CCS and NACS charging standards. Tesla customers are already our largest segment by brand for L2 charging. And we see the transition to NACS as an opportunity to expand our addressable market for DC fast charging significantly. You can see on Slide 11 that DC Fast Chargers continue to be a growing part of our business, with 1,435 DC Fast Chargers contracted and sold in the first nine months of 2023. Approximately $27 million in revenue so far this year can be attributed to DC Fast Chargers sales. Now, while we expect that L2 chargers will continue to represent the majority of our installed chargers in the near-term, we are pleased to see the growth in DC Fast Chargers sales. On Slide 12, you can see our innovative product portfolio which has advanced and flexible solutions for both Level 2 charging and high-powered DC fast charging. The variety of products we offer appeals to a broad and diverse range of customers, ensuring that we are prepared for the global increase in EV demand. On Slide 13, in the third quarter, Blink contracted, sold, or deployed, or acquired 5,956 chargers both domestically and internationally, bringing the total charger count for the company to nearly 85,000 chargers since Blink's inception. Now, as we've said, we're giving you these percentages. So right now, 78% of the company-wide number is attributed to North America, and 22% is to international locations, predominantly in Europe, England, Ireland, the Netherlands, Belgium, and several others. Slide 14 shows a representative group of our customer base, including many recognizable names across commercial entities, multifamily complexes, planned communities, healthcare facilities, fleets, and municipalities around the world. Now, just to name a couple, during the quarter, we were pleased to announce partnerships with Royal Farms convenience stores, with Parkopedia, a leading global connected car and parking service provider, and with Arcos Dorados, the largest independent McDonald's franchise in the world. We also increased our geographic density by adding our first chargers in El Salvador and in Puerto Rico. So, with this and a lot of data we provided, I will now pass the presentation on to Michael Rama, our CFO.

Thank you, Brendan, and good afternoon, everyone. Now turning to Slide 16, total revenue in the third quarter of 2023 grew 152% year-over-year to $43.4 million. In the nine months ended September 30, 2023, total revenue grew 154% to $97.9 million. Product sales in the third quarter of 2023 were $35.1 million, an increase of 162% over the same period in 2022. In the nine months ended September 30, 2023, product sales were $76 million, a growth of 151% over the same period in 2022. This is due to customers purchasing greater volumes of our commercial L2 and DC Fast Chargers. Third quarter 2023 service revenues, which consists of charging service revenues, network fees and car-sharing revenues, were $6.7 million, an increase of 119% compared to the third quarter of 2022. For the nine months ended September 30, 2023, service revenues were $18.5 million, an increase of 171%. The year-over-year growth was primarily driven by greater utilization of our chargers in the U.S. and internationally, the increased number of chargers on Blink networks, and revenues associated with the Blink Mobility car-sharing program. Gross profit for the third quarter of 2023 is approximately $12.8 million, an increase of 167% or $8.3 million over the same period last year. As a percentage of revenue, gross margin was 29.5% in Q3 2023 compared to 27.7% in the same period of the prior year. Now for the nine months ended September 30, 2023, gross profit was approximately $29.6 million, an increase of 256% or $21.3 million over the same period last year. Now as a percentage of revenue, gross margin was 30.3% compared to 21.6% in the same period last year for the entire year. As mentioned by Brendan earlier, our strategy of vertical integration and insourcing of manufacturing as well as cost avoidance and cost optimization efforts have contributed to the continuous increases in our gross profit and margins. And we're not done yet. Operating expenses in the third quarter of 2023 were $123.5 million compared to $29.3 million in the prior year. Operating expenses in the nine months ended September 30, 2023 were $211.2 million compared to $69.8 million in the same period in the prior year. The elevated operating expense number in Q3 2023 includes a non-cash, goodwill, and intangible asset impairment charge of $94.2 million related to a quantitative impairment analysis which determined that the fair value of all reporting units within the company were less than the carry amount. It is very important to mention, and note, here that these impairment charges are non-cash and they do not, I repeat, do not impact the operations of our business in any shape or form. Excluding these impairment charges for our -- from our operating results for the third quarter of 2023, our business operating expenses remained flat year-over-year at $29.3 million. At this amount, including the operating expenses for 2023, includes the acquisition expenses of Envoy -- or expenses related to the Envoy acquisition of $1 million. Meanwhile, we increased our Q3 revenue by $26 million year-over-year. That is a 152% increase in revenue while keeping operating expenses flat. We achieved it through synergies and continuous improvement efforts to grow revenue and optimize our cost footprint. Now adjusted EBITDA for the third quarter of 2023 was a loss of $11.7 million compared to a loss of $17.6 million in the prior-year period. This is an improvement of $5.9 million year-over-year. Now sequentially, Q3 2023 adjusted EBITDA improved by $1.8 million compared to the prior quarter. As a percentage of sales, our Q3 adjusted EBITDA improved 1,700 basis points year-over-year. We expect this trend to continue as we increase volume and our gross profit and realize more of the business savings through our continuous improvement plan that Brendan mentioned earlier. Now in the nine months ended September 30, 2023, adjusted EBITDA was a loss of $43 million, a decrease from a loss of $45.6 million in the same period of last year. The adjusted EBITDA for the three and nine months ended September 30, 2023, excludes the impact of stock-based compensation, acquisition-related costs, one-time non-recurring expense, non-cash impairment charges, and a non-cash loss on the extinguishment of note payable. Now, earnings per share for the third quarter of 2023 was a loss of $1.74 per diluted share, compared to a loss of $0.51 per diluted share in the prior-year period. In the nine months in the September 30, 2023, the earnings per share was a loss of $3.02 per share, compared to a loss of $1.39 per share in the same period of the prior year. Please note that the impact of the non-cash accounting adjustments to our goodwill and intangible assets negatively impacted Q3 and year-to-date earnings per share by $1.54. Adjusted earnings per share for the third quarter of 2023 was a loss of $0.16 per share compared to a loss of $0.47 per diluted share in the prior-year period. In the nine months ended September 30, 2023, the adjusted earnings per share was a loss of $1.15 per share compared to a loss of $1.23 per share in the same period of the prior year. Non-GAAP adjusted earnings per share is defined as adjusted net income, which excludes the impact of stock-based compensation, acquisition-related costs, one-time non-recurring expense, non-cash impairment charges, and the non-cash loss on the extinguishment of note payable divided by the weighted shares outstanding. Now turning on to Page 17, or Slide 17, you could see that in Q3, we are continuing the trend we saw in the second quarter of increased gross profit when compared to our historic results. This is primarily due to the high demand for our chargers, our ability to meet the increased demand and, generally, increased utilization. Our strategy of increasing our in-house manufacturing is boosting margins, and we expect to see the benefit reoccurring and expanding in the long-term. We ended the second quarter with cash and cash equivalents -- We ended the third quarter with cash and cash equivalents in the amount of $66.7 million. Our cash burn in the third quarter was $17 million, which was significant improvement from Q1 of $28 million -- or Q1 of 2023 of $28 million, and Q2 of 2023 of $47 million. We have flexibility in terms of strengthening our balance sheet as we move forward. We have an outstanding ATM of $230 million, and are engaged in exploring other opportunities. Our goal has been to demonstrate the strong operating results of Blink's business along with profit-generation potential as we entertain additional sourcing of shareholder-friendly funding. Our management team is focused on prioritizing sustained profitability and achieving positive adjusted EBITDA run rate by December 2024 through revenue growth, gross margin expansion, cost savings, and streamlining our processes to foster a culture of continuous improvements. This second consecutive quarter -- of a record quarter results a clear indication that our financial and operating strategy is effective. And now, I'd like to turn the call back over to Brendan for a few final comments. Go ahead, Brendan.

Thanks, Michael. We are thrilled to have delivered our second consecutive quarter of absolutely record-breaking revenue growth. We had to push the team to think outside of the box and while adopting a methodical and consistent approach to reducing operating expenses. Given our performance to date and the visibility we have, we've raised our revenue target for the full year to $128 million to $133 million, and we have reiterated our goal of targeting positive adjusted EBITDA by December 2024. We are very proud of this team and the effort this past quarter. But we are excited even more about what the future holds for Blink as we continue to focus on fundamentals and we remain committed to delivering discipline and continuous improvement as we charge towards profitability and breakeven in December of 2024. So with that, I believe we are now open and ready for questions, so we'll turn it over to the operator.

Certainly. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Your first question is coming from Robert Jamieson with UBS. Please pose your question. Your line is live.

Hey, guys, congrats on a great quarter. Really nice to see the revenue growth. I guess just to focus a little bit on gross margin, just given the strength in product sales, obviously charging revenue solid as well, but just kind of want to talk about the gross margin profile between your Level 2s and DCFCs. Has this become a larger portion? I mean, how should we think about that going forward?

Yeah, it's a good question. So, when we break out the two, of course, on our L2 in our Series line, we have very, very robust gross profit on a new unit retailed. DC Fast Charger, on an aggregate level, lags behind. And what we are doing and we began doing this month and actually the previous quarter is we started to introduce Blink built and manufactured DC Fast Chargers. The first was our Series 9 charger, which it is a 30 to 40 kilowatt charger, mostly fleet and dealerships, but it's the number one seller we sell. We've improved the gross margin on that product and we expect to see as we sell more of those in the balance of this year and the next year. And as we previously announced, we're working on our own 240 DC Fast Charger, which will be a silicon carbide model. That will either be 100% manufactured at Blink or manufactured through a contract manufacturer where our gross profit margin hits our targets and we're finalizing those plans. So, each step of the way we're looking at the portfolio and we're saying, "Here are margin targets. Let's make sure we balance the portfolio on both DC Fast Chargers and L2s to get to the aggregate target." And so far so good, but we have more work to do on that and we've already laid the groundwork to achieving all those goals.

And areas where you can continue to control some of your operating expenses? I know you've got ongoing programs where you're trying to consolidate some of your redundant systems, move things on to the Blink network. Just kind of curious when we look through the rest of this year and then into '24, are those going to -- which is going to basically drive most of that improvement? Are there any other levers that we should be thinking about as we kind of look into next year?

Yeah. It's predominantly at first, so when we see some of the savings start to trickle in Q4, it's going to be around network. Q1 next year, you're going to see systems integrations on back office, net suites, sales force, other ancillary systems that will go from a country basis to a global basis, and then you're going to see more ancillary software applications that reduce the need for human capital across the board. So, what we don't have is a one-lever approach on this. We have a multiplicity of levers. And to get there, we took one of the major consulting companies who did a complete analysis on how do we get to this EBITDA number. So, we analyzed the whole business globally. We looked at both where we had to enhance revenue and where the additional both cost avoidance strategy and cost cutting strategies need to come into play. And it is a very robust plan, and we are working towards that plan. We look to -- it's going to -- most of it is going to come into effect in the first year and then trickle in the first half of next year. And then as we get into the second half, you see Q3 with the net results all manifesting in Q4 next year.

Excellent. Thanks for taking my question. Congrats again.

Sure, thank you.

Your next question is coming from Craig Irwin with ROTH MKM. Please pose your question. Your line is live.

Good evening, gentlemen. Congratulations on this chunky revenue result. I wanted to ask, Brendan, if you could talk a little bit about what's working specifically for Blink here, right? Your growth rates are materially above that of the rest of your peers, what we are seeing across the industry. I understand Level 2 is a point of strength, obviously, for Blink and the market right now. Can you maybe speak about whether or not this is market-related, Blink-specific as far as the specific products that you're offering? And can you maybe talk about the relative availability of some of the funding support out there for your customers to use these Level 2 products and whether or not this is having a beneficial impact versus some of the challenges in the fast charging area of the market?

Yeah. So first, I don't know if we're unique or not. I think we're unique in the way that our flexible model doesn't say no to a customer, right? And that -- if the customer is a good site host and it's creative towards high utilization, we can pay for it all and derive revenue. If it's not, we have the products and services that are competitive. But when you add into that, and this is really the point of differentiation, the fact that on the majority of L2s that we sell, there's still some that are third party, but on the majority we sell in the U.S., it's all shifted to our own manufacturing. And we control that cost. We build the parts to some degree in India. We build all the way down the sub-assemblies in Bowie, Maryland. We put those together at a much lower COGS, and that makes us hyper-competitive, especially when we add the network to it, which we designed our own network. Others can't do that. And we're also not subject to supply constraints. We'll take the post office. We were the first company in with the post office, because we were -- it was easier for us, not that it's difficult in general, it is a big task, to increase production while servicing all of our other customers and then meeting the timelines of the post office simultaneously. So that is what set us apart. We could still get a very effective margin on the post office deal, and yet be ahead of all of our customers -- rather our competition in winning that same deal, where others couldn't do that. And we continue to do that. The great thing about the post office deal is we've won other fleet deals, both commercial fleet deals, and we got another one in just the other day of a $2 million deal in, is that competitive advantage from manufacturing and from this cost-effective model that we can get in there and maintain high margins. DC Fast Charger, it's a different story, right? You're not going to get as highest margin, but if you can get the volume in, it's very good for revenue. And then, you have to ship the manufacturing. And answer the question, yeah, there's a lot more L2 deals out there, utility-driven and local-driven on a rebate format or in conjunction with the utility bill, even from multifamily dwellings and other. And we continue to align with those programs across the United States and Florida and in other jurisdictions that offer them. And it's just -- I mean Craig, I can't say more about the maintenance and the upkeep difference between a heavy DC fleet and a heavy L2 fleet. It's just remarkably different in terms of the upkeep, the maintenance. And as we've discussed many, many times, if I'm looking at an owner-operated model and install of an L2 that is full turnkey by Blink, I just need 18 months for a payback on 10% utilization. And if it's a hybrid, I need a year at 10% utilization. That really sets us apart because you know by the numbers you've done, DC fast charging doesn't have the same profile.

Understood. That makes a whole lot of sense. So, the second question I want to ask is about your revenue guidance. $128 million to $133 million is a nice increase, obviously, following through on the strengths in the third quarter. That implies that the consensus numbers are bracketed by what you're giving us as guidance tonight. Can you maybe talk a little bit about the sequential progression here? Is there maybe some conservatism in the way that you're looking at the fourth quarter? Or is there potentially some supply chain considerations? Or maybe -- are you anticipating just a small impact of the move to the new facility in Bowie, Maryland, having a short-term impact on your throughputs? Can you maybe just describe the sequential?

Sure. Yeah, so let's start with the last one. So we don't anticipate. We're going to do parallel processing out of Bowie. So, as the new facility comes online, we'll still be processing out of the Tesla Drive location, and then the new location will begin operations. So, you might have a 24-hour cycle with this interruption, but it won't be anything more than 24 hour, maybe 36 hour at the outset. Otherwise the team has got a good plan together to ramp up and change very, very quickly. Now, when we look at what happened and yeah there was a little bit of -- we got the opportunity to ship and we had a lot more product come in in the month that was already booked. And the warehouse situation, as, Craig, I've discussed with you in the past, isn't great, right? So, we want to maintain a throughput push. So, instead of holding and saying, "Hey, we'll count that next quarter," we pushed everything through because we had a whole bunch of bookings that were coming in in terms of product into the warehouse for Q4. And frankly, we couldn't hold both, right? So, that increased revenue. We had some of those bookings were going to be in Q4, but they ended up in Q3, which really gave us a good number. So, there's a smoothing effect going in to Q3, where it's not going to be as high as the number as we saw this month, but it's still going to be one of the best we've ever had.

Excellent. And then, last question if I may, your charging service revenue is just doing fantastic. So, you're obviously seeing the same benefit that EVGo is. People are driving their EVs more and using third-party charging more. But can you maybe talk about your mix of endpoints and your expectations for utilization on the network? I know there's some legacy endpoints versus endpoints that you've invested in more recently. How do you feel about the potential for continued increases in utilization and throughputs on the network?

Yeah. We feel very good about the choices we've been making over the last three-plus years. As you indicated, we had some legacy chargers out there that weren't doing as well, but we analyzed the book of business on -- and let's go to the owner-operator model, both in Europe and in the U.S. We're seeing greater than 15% utilization on average in the majority of chargers that we installed using our new methodology and there's no wacky science to the new methodology. It's basically a platform of ArcGIS appended with a lot of data. It looks at how many chargers are coming into the space, including competitors, looks at how many EVs are going to be sold, looks at the geographic implications of where the site has, and makes sure that that site meets our projected utilization. And we've been using that in Europe and the U.S. in a disciplined manner, since about November of 2020. And those sites and those new installations that have happened do much better. Now, we're also working with the older sites and where we can upgrade, move, or change chargers, we're doing so. We're doing some upgrades now on locations where we believe that with new equipment that is higher than the existing infrastructure, which is mostly 50 kilowatt, we're going to get a higher degree of utilization on that. The operations team led by the COO Mike Battaglia has that underway. So, that'll give us some benefit, but it's going to be marginal. So, it's really sticking to our guns on the owner-operator model, whether hybrid or other, on making sure we have a disciplined approach to both investments and to charger placement.

Excellent. Well, congratulations on this progress. I'll go ahead and hop back in the queue.

Sure.

Your next question is coming from Stephen Gengaro with Stifel. Please pose your question. Your line is live.

Thanks. Good evening, everybody. I guess the first for me is when I look at -- and you talked a little bit about this, but when you look at the product sales, the product sales were obviously very strong. And can you talk about where they're going? Like, what were the big drivers or end markets where the product sales were going that kind of drove it so strongly sequentially?

Yeah. So, I'll break them down in the big categories, right, and one's going to be a general kitchen sink. So, we continue to have a robust level of dealership in commercial fleet, which is increasing over time. As we started with dealerships, now we're moving that fleet business beyond dealership into other companies, we'll have a pretty significant announcement on one of those commercial fleet, and then municipal fleet. Municipal fleet continues -- such as the post office continues to be a very, very big opportunity for us. And as I said earlier, it definitely is one deal begets another deal, and if you did a very good job on that, you're going to get a sales opportunity. When we exploit that fleet channel, both municipal and the commercial fleet, it's predominantly sales, right? There are very few owner-operator instances within that. And that adds to that high product sales mix. Now, when we get into the other group, that's where it's a mix. And that would be healthcare, which we're big in. We have a multiplicity of contracts with healthcare organizations all across the United States, from Cleveland Clinic to Lehigh Valley Health to Kaiser Permanente, and I'm probably missing about 10 that the COO would yell at me for not mentioning. But that sends to -- looks at, it's a split between the two. Some want to own them and others want an owner-operator model, and then it's a 50-50 split on the hybrid model, so which reduces our CapEx involvement. That is another big book of business. And the rest is a kitchen sink of others. Like, we mentioned the McDonald's there from the largest franchise. That's second, we'll call it the catch-all, which is all those customers that we have. But this need for the sale of the chargers, as we look at, and this gives us a lot of faith for the future, right? When we look at that 30 million charger need, and that's at 35% pen rate, and we've got to keep in mind, California in 2023 is at 22%, so they're almost -- they're getting towards that number pretty quick on there. That is 28-plus million of them are chargers that are L2 that are designated for multifamily dwelling, they are designated for fleet, they are designated for other municipal fleet and for in-home charging. And that is Blink's sweet spot. So that is where the sales are coming from today and that's where we see the sales coming from for the foreseeable future.

Great. That helps. Thank you. And then, the other thing I was going to ask and I don't know how granular you're willing to get, but when we think about sort of an EBITDA positive position by the end of 2024, any ballpark type of revenue -- quarterly revenue you need? I mean, I assume there's cost controls involved, there's probably some gross margin improvement. Any targets you can give us as far as growth rates needed to get there?

Not yet. So, what we're doing is we began to activate the plan, and it's very detailed. When we hit the target for the end of the year, which was the first time we gave guidance out as you might remember, right? I was very -- we were very nervous doing that, but we did it. It looks like it was the right move to do. We'll start to analyze everything and then see if we either want to do quarter-by-quarter targets or give general. We're going to give general guidance, we believe, for the year after we report out the end of the year on 2024, then we'll assess the need for specific guidance. But you're right on. When we look at what the levers are, so there's cost reduction, there's some personnel reduction due to efficiencies in there and redundancies that are exposed. There is margin enhancement. There is fee enhancements where we can take pricing [due to] (ph) the market says, "Hey, you can increase and it could be absorbed without any headaches," all of that is baked into the plan.

Excellent. Thank you for the details.

Sure.

[Operator Instructions] Your next question is coming from Noel Parks with Tuohy Brothers. Please pose your question. Your line is live.

Hi, good afternoon.

Hey.

Just had a couple things. Just sort of a general perspective, I was wondering maybe what you're thinking about, or maybe what you're measuring around the power of your brand, and the reputation as far as charger availability. Something that clearly -- more expansion, people have more experience with different operators, it seems to me those are things that are increasingly going to be important. So, any thoughts you have on that would be great.

Oh, yeah. So it's a huge focus of the company. So, I've said this before and will continue to say, when we talk about quality, let's put quality in a whole listing bucket. It's from everything we say to everything we do to everything we build and everything we maintain. While we had a focus on quality, it was, let's say, X, and now it's definitely Y where we talk about it every day. We are fully participating in the U.S. government sub-committee that is looking at charging quality. We're fully involved in California. Our CTO is taking great steps to make sure that we meet the minimum and plus-plus on what the quality standards that are coming out of both California and out of the federal study that he actually participates in. And then, we're working on both downstream quality to make sure that everything about our chargers and the network work. When we look at and we analyze and we break down what the quality issues are, it's over 85% of all -- come in customer connectivity. And it's either the network, the cellular connection, the screen, or the credential and ID. So, we are eliminating points of contact where possible to make sure when a customer engages with our charger, there's a limited amount of points of failure. And that's what the team is doing. And some of this also goes into everyone maturing as a company and make sure that you place chargers in the correct location where they can connect to a network, and that you eliminate the ones that don't, or when you go into that installation, you come up at a higher budget on your capital expense to enhance the level of connectivity so that there's no interruption. And these are all things that Blink is doing. And I should say, the industry, as a whole, is coalesced to improve that level of quality. And the last part of that is you really got to look at your legacy portfolio and you got to make a decision on some of these chargers and especially ones that are owned by individuals that don't upgrade them. And frankly, you have to be aggressive. You have to take them off the market. And sometimes you have to negotiate with the owner to say, "Hey, we keep getting bad knocks on this, because you won't buy a new charger or won't upgrade this." And those are difficult conversations. But across the board on all those levers, Blink is fully engaged and we are seeing improvement.

Great, thanks. And another thing is, among some of the startups that are specifically focusing on the commercial market, including some that are looking at, everywhere from delivery to more heavy duty, it does seem that they're -- after what had been maybe a little bit of a COVID era slowdown, it seemed that they were on a pretty good trajectory as far as adoption, large commercial fleets, piloting technology, and so forth. But then it seems in just the last quarter or so we've been getting sort of some signs of there being a bit of a chill there as far as end customer is actually pulling the trigger and moving ahead with orders. I just wondered if any of the -- you saw any of that filtering down through charger sales, fleet discussions, and so forth.

Yeah. We're -- so hands down, the number one uptick right now is fleet. And what we're not seeing is we're not seeing an accelerated bookings to revenue fallout, right? It's remaining flat and in fact it's improving from what it was before. So, even in 60 and 90 days, 60, 90 and sometimes 180 days out on the time for when you booked it to the one you're going to get the revenue, we're not seeing significant fallout in any of those numbers right now. And a lot of that is fleet. You're one-offs a really quick delivery cycle, the 30 to 60 days. So, it's your longer commitments and fleet that we're going to really look at. And those are the commercial ones that you win, the missable ones like the post office. We're already in our second tranche in the post office and we got so much more to go because that's 43.5 -- 44,500 chargers or something, I might have gotten there off a little bit on that. I'm thinking about our revenue number again 43 – [$44.3 million] (ph). So, even on that there's no fall off. We did the first trance, the second trance, so the post office is fully committed. So nothing. And even, we see it uptick [in install] (ph) multifamily dwelling and all these other areas too. So, I'd say from who we're dealing with and what we're seeing on the business front, everybody is engaged and it's an uptick. We're not seeing much fallout at all in any customer segments.

Great. Thanks for the detail. Bye-bye.

Your next question is coming from Chris Pierce with Needham. Please pose your question. Your line is live.

Hey, good evening, everybody. Could you just talk about -- I know you talked about it on the last call reasons why gross margins might be down sequentially in the second half of '23, but then they might accelerate in '24. Can you just kind of refresh our memory on that? I think it was legacy charging equipment that you hadn't built. And then, you mentioned in response to a question, potentially using a third party to build Level 3 charges. I was just kind of curious why you would want to go down that road again.

Yeah. So, it's an option. So we have -- let's start with the last one and move forward and remind me if I didn't get the first one. But let's go to the last one. So, we've got a fully dedicated study that is almost completed on building our own DC Fast Charger, the 240, where that would take place and what the cost structure will be. We also have a study going on, on the analysis on third party, what that hit on capital budget will be, et cetera. So, we haven't made a final decision here. What we're going to do is make the right decision for Blink and for Blink shareholders in the bottom-line of the company. We have our eye and our bias towards gross margin, but we also have to look at the whole financial equation to make sure that works for what we need to do. Now, when we say contract manufacturing on that, we would never -- if we decided to move forward with manufacturing on that, we are not going to go and buy and say, "Hey, we'll use your design that looks like our design. It will be our charger." So, it will be designed to our spec and we're going to source the product with them to make sure we get it down to a level that maintains our margin. That is what we're looking at right now. Now that could change, right? It could change or pivot as more data becomes available, but that's where we are on the topic. We'll have a final decision on that out shortly. As I said, the product is in final prototype design to functional units now and then we'll have a final assessment on it. And what was the -- I forgot the other one already, I'm sorry.

Oh, no problem. Sequential gross margins in Q3 versus Q2...

Yeah. So, you hit it. You hit some of it already.

...[indiscernible] '24.

Yeah. So a lot of DC Fast Charger took us down from the higher number that we had in that and there's still -- we have quite a bit, we had less legacy that we worked through in Q2. We still have, on a percentage basis, it's low, but when it impacts margin, it tends to have a greater impact because of where you're at. We still have some legacy. I would estimate the legacy is less than 5% and we will get your correct number on that, but I'm doing an estimate in my head on it, it's less than 5% of aggregate that we have in stock and that we are currently selling. But it is still there. It is predominantly on L2 and it is legacy that we have both in the United States and in England -- and in Europe that we're working through.

Okay. Perfect. And just lastly, you talked about Level 3 demand and we saw you just kind of answered this question around it. Would you say Level 2 demand is slowing? Or you wouldn't frame it that way, you would just say Level 3 demand is growing at a faster rate than you expected?

So, I've been blessed with getting to work for big DC fast charger companies, and then getting to work for Blink that's predominately L2 that does some DC fast charging. The pace of L2 is increasing dramatically. Although, if you do a share of voice analysis, all you hear about is DC fast charging. But that share of voice analysis doesn't equate to the volume. All the L2 lines are increasing dramatically. And that makes sense because 90%-plus of the charging takes place on L2. So, now we're starting to see higher velocity and throughput on that, which makes sense with every piece analysis that ever has been done in the industry.

Okay, thank you.

We have reached the end of our question-and-answer session. And now, I will turn the call back to Vitalie Stelea for closing remarks.

Thank you, Kelly, and thank you to all of you on the phone and the webcast, as we announced another record quarter for Blink. This concludes our call today.