EVGO - NASDAQ

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the EVgo Q2 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Heather Davis, VP of Investor Relations. Please go ahead.

Good morning, and welcome to EVgo's second quarter 2025 earnings call. My name is Heather Davis, and I'm the Vice President of Investor Relations at EVgo. Joining me on today's call are Badar Khan, EVgo's Chief Executive Officer; and Paul Dobson, EVgo's Chief Financial Officer. Today, we will be discussing EVgo's second quarter 2025 financial results, followed by a Q&A session. Today's call is being webcast and can be accessed on the Investors section of our website at investors.evgo.com. The call will be archived and available there, along with the company's earnings release and investor presentation after the conclusion of this call. During the call, management will be making forward-looking statements that are subject to risks and uncertainties, including expectations about future performance. Factors that could cause actual results to differ materially from our expectations are detailed in our SEC filings, including in the Risk Factors section of our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. The company's SEC filings are available on the Investors section of our website. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. Also, please note that we will be referring to certain non-GAAP financial measures on this call. Information about these non-GAAP measures, including a reconciliation to the corresponding GAAP measures can be found in the earnings materials available on the Investors section of our website. With that, I'll turn the call over to Badar Khan, EVgo's CEO.

Thank you, Heather. EVgo had yet another excellent quarter with strong operational performance and achievement of important strategic milestones. We had particularly strong revenue this quarter, up 47% versus the same quarter last year. Adjusted EBITDA was more than $6 million better than last year, bringing us closer to our goal of breakeven adjusted EBITDA for the full year. We had 4,350 stalls in operation and ended the quarter with $183 million in cash, cash equivalents and restricted cash, which is $12 million higher than the prior quarter. And most importantly, does not include $65 million in gross proceeds from the first drawdown from our commercial bank facility and expected 30C sale proceeds in August. On July 23, we closed on the largest and first-of-its-kind commercial bank financing for charging infrastructure in the U.S. for $225 million with the ability to expand to $300 million and have already received a $48 million first drawdown. This is a major strategic milestone for the company, enabling us to accelerate our expansion and diversifying our funding sources with low-cost, non-dilutive capital. As you will see, we expect to be able to increase our ending 2029 public stall guidance by approximately 3,500 more stalls than we had previously estimated to roughly 14,000 stalls. Strategically, EVgo is now very well positioned competitively as one of the best capitalized players in the sector. As always, we are focused on being disciplined in allocating capital, leveraging debt funding sources and the growth of our balance sheet. At this time, we do not have a request in front of the DOE LPO for our next advance. One of the many attractive features of the DOE loan is that there is no time limit, where we need to request advances for specific tranches of eligible costs we incur other than the overall 5-year availability period. And finally, we've passed enough milestones this year to be able to forecast a reduction in net CapEx per stall for 2025 vintage stalls by 28% versus our initial expectations. A reduction in net CapEx per stall of this magnitude results in significantly higher returns. The outlook for EVgo as an owner-operator of DC fast charging remains very bright, with demand growth outstripping supply growth. The latest independent forecasts project that the increase in electric vehicles in operation is outpacing the more modest increase in the number of DCFC stalls in the U.S. These latest forecasts take into account all of the federal administration's policies in electric vehicles, which results in EV VIO over 4x higher than today by 2030. As we're seeing from GM, Ford and many others, major automakers continue to prioritize a growing lineup of affordable electric vehicles that appeal to all customer segments. Forecasts of the growth in DCFC stalls are not as robust, but anecdotally, we see a slowdown taking place among both a large number of smaller companies, who are likely going to struggle to attract capital in this environment and also a small number of larger companies whose parents may be allocating capital to other priorities. The DCFC forecast shown here represents the industry continuing to grow at the same pace it did over the last 12 months. As a result, we expect that the recent trend of more electric vehicles per fast charger is likely to continue, resulting in a promising macro environment for EVgo in this coming 5-year period, which we expect will continue to drive up both EVgo market share and throughput per stall. This macro environment continues to be supplemented by multiple additional tailwinds that continue to show positive trends, like the electrification of rideshare, autonomous electric vehicles and more affordable vehicles in both the new and used electric vehicle markets, attracting more customers without at-home charging and thus reliant on public fast charging. In June, Uber disclosed that the number of their EV drivers globally was up more than 60% versus the year prior. And in the U.S., only just over 1/3 had a dedicated home charger. We are very pleased to close the commercial bank facility provided by a syndicate of global project finance banks led by SMBC and includes Royal Bank of Canada, ING, Bank of Montreal, and Investec. With an initial 325 basis point spread, this loan demonstrates the creditworthiness of our business that these commercial banks see and the confidence the banks have in the resilience of the cash flows generated by the ultrafast charging infrastructure EVgo is building across the United States, to give customers more choices to charge their electric vehicles. This facility is complementary and incremental to our $1.25 billion DOE loan with a similar structure with standard project finance terms. It offers tremendous flexibility and can be used to finance the build-out of more EVgo-owned stall types, including dedicated hubs for autonomous vehicle partners. We received a $48 million advance on July 24, and we have the ability to draw down on the facility monthly. We have the ability to go faster and build a higher number of stalls or go slower with lower deployment targets. All new EVgo-owned stalls can now be levered going forward. Additionally, this bank facility represents an important milestone in establishing long-term relationships with commercial lenders. We believe the opening of the commercial bank project financing market as a source of capital for public fast charging infrastructure reflects the maturity of the company, the profitability of the EVgo network, and confidence in management. With the financing we now have in place, together with our targeted CapEx per stall and reinvesting excess operational cash flow over the next 5 years, we now expect to be able to more than quintuple our annual stall build schedule from 825 stalls in 2025 to up to 5,000 by 2029. That rate of growth in 2029 is more than double our earlier estimates. This accelerated pace meaningfully differentiates EVgo amongst U.S. fast charging companies and results in a level of scale that will become harder for others to replicate over time and deepens the competitive moat around our business. The second strategic development this quarter is that we're now forecasting a 28% reduction in 2025 vintage net CapEx per stall from our original estimate. This is an exciting milestone. Even including the impact of global tariffs, we are still expecting an 8% improvement in vintage gross CapEx per stall versus what we initially expected for 2025. This improvement is driven by savings from lower contractor pricing, material sourcing, and increased use of prefabricated skids, some of which we shared in the last earnings call. Today, however, I'm able to share that we now expect vintage CapEx offsets to be around 50% higher than we originally expected because more stalls we're operationalizing this year are expected to have state grants associated with them. Unlike many other charging companies, we have a large enough project pipeline, where we can now move the timing of operationalizing assets from 1 quarter to another and from 1 year to another. That flexibility allows us to capture more state grants wherever those opportunities may arise. As a reminder, capital offsets come from 3 sources: state and utility incentives, OEM infrastructure payments, and federal incentives like 30C. Our forecasted performance this year is a reminder that regardless of recent changes to federal incentives, state grants incentives are alive and well. 30C will remain in effect for assets placed in service until the end of June 2026, 9 months longer than many other incentives created by the IRA. As a result, we expect net vintage CapEx per stall to be significantly lower this year, materially enhancing our return on capital, especially considering the top 15% of our stalls are already generating $50,000 in cash flow per stall per year against a net onetime average CapEx of $74,000. Two consequences of shifting our project portfolio to capture state grants is that a certain number of stalls that were due to be operationalized in Q3 will now shift to Q4. And secondly, stalls with state grants tend to be a little less productive in terms of throughput per stalls in the first year or 2 than other stalls without state grants. However, the lower CapEx more than makes up for it when we look at project returns. Our long-term expectation is to continue lowering gross CapEx per stall as a result of our next- generation charging architecture that remains on track for the end of next year. That said, we conservatively do not assume capital offsets are as high as the last 2 years, which still results in very favorable project returns, especially given the higher annual cash flow per stall levels we expect to reach by 2029. Let's now briefly turn to progress on our 4 key priorities: Improving the customer experience, operating in CapEx efficiencies, capturing and retaining high-value customers, and securing additional complementary nondilutive financing to accelerate growth. Improving customer experience remains our #1 priority, and our strong momentum from last year continues. This quarter, we experienced lower uptime on certain equipment types due to faulty firmware updates that were largely rectified in July, and we decided to take that opportunity to tackle some legacy hardware issues across multiple charger types that resulted in higher associated maintenance costs. These efforts are fully aligned with our goal to continually improve the customer experience, and we are already seeing these efforts pay off with much higher throughput per stall in July. Building larger public sites with 6 to 8 stalls is now our standard configuration. At the end of the second quarter, 24% of our sites had 6 stalls or more. We continue to deploy high-power chargers. The number of stalls served by a 350-kilowatt charger is now 57%, up from 41% a year ago and 25% 2 years ago. Autocharge+, our seamless plug-and-charge capability, continued to gain traction, accounting for 28% of sessions initiated. Finally, our customer success metric of One & Done increased 1 percentage point this quarter versus last year, with 95% of sessions resulting in a successful charge on the first try. As we detailed in our first quarter earnings call in May, we expect that the impact of increased tariffs on our CapEx will be more than offset with capital efficiencies we've identified and implemented, and there is near 0 impact on our operating costs from tariffs. EVgo continues to meet all our milestones in the development of our next-generation charging architecture we are jointly developing with Delta Electronics. We are on track to have our prototype and initial deployment in the back half of 2026. We remain focused on improving the profitability of the overall business while investing in the future growth of the company. We expect continued improvement in G&A as a percent of revenue throughout 2025. Over half of our throughput in Q2 came from frequent use sources, rideshare, OEM charging credit programs, and EVgo subscription plans. This quarter, we've added to our dynamic pricing, digital marketing, and customer acquisition and reactivation capabilities with the deployment and use of AI agents to optimize and increase the effectiveness of our campaigns. In certain geographies, we launched seasonal-based pricing to help cover the increased costs from summer utility tariffs. Our second pilot site with native NACS cables went live in June. The focus of the initial pilot in February was to validate technology. And for the second pilot, our focus is to get an early read on our ability to attract Tesla drivers with the NACS cables installed. While it remains very early, we are encouraged by the fact that since going live with the NACS cables, this site has had significantly more usage from Tesla drivers as it had prior to installing the NACS cables. Once we scale these cables across the rest of our network and because our charging stations are faster than Tesla and closer to where Tesla drivers live, work and go about their lives, we expect to see potentially significant growth in usage per stall. This is because we expect to attract a greater share of Tesla drivers than before, and these drivers still make up the majority of EVs on the road. In August, we expect to add 30 more NACS cables to more sites, and we expect to add around 100 NACS cables to sites on a retrofit basis through the rest of the year. Finally, we are in construction of our first flagship sites with General Motors. We look forward to opening these stations, which will feature up to 20 stalls and offer features like overhead canopies, lighting for an elevated customer experience. We've made huge strategic progress on financing this quarter with the closing of a low-cost commercial bank facility. We expect to close our second sale of 30C income tax credits this week for our 2024 vintage portfolio for an anticipated $17 million of gross proceeds. As I said earlier, we now expect 45% CapEx offsets for our 2025 vintage stalls. Paul will now cover more detail on the commercial bank facility and how that relates to higher long-term estimates, our financial performance for Q2 and our updated outlook for 2025.

Thank you, Badar. I'll walk us through the summary loan terms for this facility. Flexible loan structure allows EVgo to build over 1,500 new public and dedicated stalls over the next 3 years and finances the 400 existing public stalls we added as collateral. As Badar mentioned earlier, facility allows us to finance stalls that wouldn't have been eligible for debt financing under the DOE loan. The interest rate is SOFR plus 3.25% with a 25 basis point increase at the beginning of year 5. Facility has a 5-year term and a 3-year deployment period. EVgo will be able to draw against the loan facility monthly after stall is operationalized for 60% of costs, including CapEx, capitalized G&A, and $31,000 of deployment expenses. As collateral for the loan, EVgo contributed 400 operational stalls into a project level SPV, and we received $48 million of gross proceeds in July after closing. We expect to see incremental network growth from this facility starting in 2026 as it typically takes EVgo 12 to 18 months to get a site operational. In terms of expected stalls in operation, we are now including estimates of growth net of removals, averaging roughly 130 per year through our EVgo ReNew program over this entire period, where we are removing legacy equipment from the network. EVgo now is fully capitalized to have roughly 14,000 projected public stalls by the end of 2029, which will increase operational efficiencies by leveraging economies of scale. This is approximately 3,500 stalls more than our previous estimate. As described in our fourth quarter 2024 earnings call in March, our unit economics continue to grow, and we expect to realize the operating leverage in our model through increased throughput per stall per day, leveraging fixed costs per stall, dependent costs such as rent and a reduction in maintenance costs through our next-generation charging architecture. EVgo anticipates that in 2029, our stalls will generate $90,000 to $104,000 per year in revenue, charging network gross margin per stall in the range of 50% to 52% and annual cash flow per stall in the $38,000 to $47,000 range. Adjusted EBITDA generation is also particularly strong. Because these per stall cash flows include all costs other than fixed costs, which will be covered by this year, the stall base cash flows fall straight to the bottom line. So by 2029, the additional roughly 5,000 stalls that we plan to build that year will generate approximately $200 million incremental adjusted EBITDA annually. As we have discussed before, this represents a very compelling annual return on a onetime net CapEx per stall of $95,000. Applying this high and low-end annual cash flow per stall from our unit economics to the anticipated stalls in operation at the end of 2029, you have a very compelling business with $1.2 billion to $1.5 billion in annual revenue from the owned and operated charging business, generating $380 million to $570 million in annual adjusted EBITDA at 32% to 38% margins. We are assuming our total adjusted G&A increases up to 2x in real dollar terms as we add to our growth G&A to build out the network, which again demonstrates the operating leverage in this business as the network is growing 4x. With full utilization of the current loans, we expect to exit 2029 with a low net debt to adjusted EBITDA ratio of under 2.5x which provides us with additional debt capacity to finance growth well into the future. Since infrastructure companies with predictable adjusted EBITDA generation and margins typically have higher leverage ratios of 5 to 6x, our expected ratio of less than 2.5 would provide us with significant incremental leverage capacity. Now turning to more detail on our second quarter results. Over the past 3 years, we have grown our operational stall base by 2.6x, while our revenues have grown 14x. Increasing our scale and maintaining our focus on costs allows us to deliver improving bottom line performance. Our public network throughput per stall has grown 2.5x in the last 2 years, significantly outpacing our public charging network stall growth of 1.4x. Throughput per public stall was 281 kilowatt hours per stall per day in Q2 compared to 230 a year ago, a 22% increase and up 6% sequentially. After a recent firmware update and incremental investment in Q2 maintenance, July average daily throughput approached 300 kilowatt hours per stall per day. In the second quarter, total public network utilization increased to 22%, up from 20% a year ago. Total throughput on the public network during the second quarter was 88 gigawatt hours, a 35% increase compared to last year. Revenue for Q2 was $98 million, which represents 47% year-over-year increase with growth in nearly all revenue categories. Total charging network revenues were $51.8 million, exhibiting a 46% year-over-year increase. eXtend revenues were $37.4 million, delivering growth of 35%. We delivered more charging equipment to PFJ in the second quarter than anticipated as they accelerated their purchasing. Ancillary revenues of $8.8 million were up 157% versus last year, driven primarily by growth of the hubs business for autonomous vehicle companies. Charging network gross margin in the second quarter was 37.2%, up 210 basis points from the prior year. Adjusted gross profit of $28.4 million in the second quarter of 2025 is up from $17.7 million in the second quarter of 2024. Adjusted gross margin was 28.9% in Q2, an increase of 240 basis points compared to last year. Adjusted G&A as a percentage of revenue also improved from 38.5% in the second quarter of 2024 to 30.9% in Q2 of this year, demonstrating the operating leverage effect. Adjusted EBITDA was negative $1.9 million in the second quarter of 2025, a $6 million improvement versus the second quarter of 2024. Now turning to our 2025 guidance. EVgo anticipates we will add 800 to 850 new public and dedicated stalls in 2025, with over half the stalls going operational in the fourth quarter. Total fiscal net CapEx has been reduced to $140 million to $160 million, reflecting the capital efficiencies we are realizing this year and faster expected development timelines, resulting in less capital spend in 2025 for 2026 vintage stalls. In addition, we forecast to add new eXtend stalls of 475 to 525 this year. Revenue for the full year is expected to be $350 million to $380 million, an increase of $5 million at the midpoint compared to our prior guidance. Charging network revenue are estimated to be roughly 60% of total revenues in 2025. We're expecting sequential improvement in the third and fourth quarters for charging network revenues. We expect the 2025 charging network margin profile to be like 2024. Our third quarter charging network margin will decrease seasonally due to higher summer electricity rates and resume its upward trajectory in Q4. Full year eXtend revenues are anticipated to increase around 25% versus last year, and ancillary revenues will be more than double this year. We expect both eXtend and ancillary revenues will be lower than Q2 in the third quarter. Xtend revenues are expected to be relatively evenly distributed in the third and fourth quarter. Ancillary revenues are anticipated to have a much higher fourth quarter following revenue recognition milestones. We're investing in accelerating the growth of EVgo, including investments in our operations and deployment team to increase stall growth as well as our next-generation architecture. Adjusted G&A for 2025 is expected to be flat to the Q4 2024 run rate plus inflation, reflecting investments in growth with some offsets due to efficiencies. These investments for accelerated growth will continue in 2026, and we, therefore, anticipate similar growth in adjusted G&A next year. EVgo continues to make progress towards adjusted EBITDA breakeven. In 2025, we continue to expect adjusted EBITDA in the range of negative $5 million to positive $10 million. Following our anticipated revenue trajectory for the back half of the year, we expect Q3 adjusted EBITDA to be negative and lower than Q2 and positive for the fourth quarter. Topline growth financed with low- cost nondilutive capital, coupled with leverage in our operating model is expected to deliver compelling shareholder returns. We look forward to keeping you apprised of our progress. Operator, we can now open the call for Q&A.

[Operator Instructions] Your first question comes from the line of David Arcaro with Morgan Stanley.

Maybe first on the CapEx trends and offsets here. Great to see. I was just wondering if there was a geographic trend that's driving the capital offsets going to 45%. Were you targeting states in a different way based on demand that you're seeing? Or were there changes in state incentives? Just wondering what shifted that geographic trend around.

Yes. Well, look, I think -- thank you, David, for the question. I think that one of the key things we wanted to communicate here is that, not only are we focused on EBITDA generation with strong margins, we are also very much focused on delivering strong returns on capital for shareholders. And so, being able to lower our vintage CapEx per stall by almost 30% is very much aligned with that. Our first priority, of course, is to lower gross CapEx per stall, which is a trajectory we've been on for some time, and we've been successful at, and we are looking to continue with our next-generation architecture. On the offsets, we're absolutely pleased with where we are this year. We had a very high level of offsets for vintage 2024 in the 50% range. This year, the offsets are also looking like they're going to be very strong. We've seen that already for our first half year deployments where offsets are at that sort of 45% range. And these grants are really coming from all over the United States, to be perfectly honest. For the first half of the year, we have a lot of grants in -- grants and incentives from California, but the rest are coming from states like Florida, Ohio, Pennsylvania, Washington. And so, it's really all over the United States. I think a key point here, of course, is that regardless of what happens with federal incentives, state grants and utility incentives remain alive and well.

And I was just wondering, any updates on the DOE loan in terms of availability, any recent conversations you've had around drawdowns that you would highlight? I know you're not currently looking for one, but curious just any background color there.

Yes. I mean, the project is performing very strongly, and that's the nature of the dialogue that we have with the DOE. It represents excellent credit quality, which hopefully you can see from our earnings today. We are not dependent on the IRA or 30C remaining in place, and so our dialogue with the DOE LPO staff remains a very productive conversation. I think the big strategic news this quarter is that we are no longer reliant on just one source of financing. The proceeds, as we just laid out today from the commercial bank loan and the gross proceeds from 30C are 3x what a quarterly advance would have been if we -- from the DOE this quarter. And so, we're very focused on not just being disciplined in our allocation of capital, but also disciplined in the growth of our balance sheet. And I think the good news or one of the many sources of good news is that there's really no time limit on when we request advances for eligible CapEx with the DOE loan other than the 5-year availability period. And so we can incur the CapEx now. And if we want to drop it into the DOE loans at some point within the next 5 years, we can or with the commercial bank facility. Of course, the commercial bank facility also allows us to fund stalls that are not eligible for the DOE loan, which I think is also very attractive. It allows all of our stalls at this point to be levered going forward.

Your next question comes from the line of Chris Dendrinos with RBC Capital Markets.

I wanted to ask a little bit on the utilization rate this quarter. And I think you mentioned that there was a firmware update that went through. And then in July, you all had, like, I guess, maybe a significant increase in the utilization rate as that got rectified. Can you maybe just provide a bit more detail about that? Maybe how long the issue was lasting and sort of what you're seeing now coming out of that?

Thanks, Chris. Yes, we did have a faulty firmware update at the beginning of the quarter in Q2, which is largely addressed at this point. We -- given that we had these issues, we did proactively take that opportunity to address some legacy charger issues at the same time and invested in maintenance to get -- really just to get a stronger network. We thought that made sense to tackle both issues at the same time. And then, as we said on the call, we can see average throughput per stall for July approach 300, which is quite a bit higher than what we saw in the Q2 average. I think what's really kind of most interesting here is that as an indication of true demand on the network, the average throughput on the chargers that -- where we weren't experiencing these issues was meaningfully higher than the chargers, where we were taking these steps on maintenance and the firmware. And I think that actually also really validates the decision and the path that we're on with our next-generation architecture where -- as I said before, I don't believe that really anybody else in our sector or very many others in our sector is able to do where we own the firmware and the development of critical components like the dispenser. And it's very much part of our journey of taking that customer experience to the next level.

And then maybe on the NACS cable, and you highlighted some promising, I guess, call it, initial results from some of the deployments that you've done so far. I guess how are you thinking about deploying those longer term? And sort of what are you looking for that would maybe drive you to accelerate deployment? Or are you already seeing things given the kind of results you've seen so far that would drive you to maybe try to accelerate the deployment of those NACS cables?

Chris, I mean, I think that the NACS cable and the autonomous vehicle space are both, I think, really interesting sources of upside for the company here. And we can talk about the AV space maybe later on. But on the NACS, we had a couple of pilot sites in the first half of the year. One was around technology validation. It's super important that we are, again, focusing on the customer experience, making sure the technology works. But the second site was really geared around are we able to attract more Tesla drivers. And I would say that I think the team is really pretty excited about the results. They're early, but what I said on the call is that Tesla driver usage was significantly higher on that site than pre-installation of the NACS cable. I do think it's early days. We're going to have about 30 cables, NACS cables, installed in August. And we're -- at this point, we're looking at 100 for the full year. These all retrofit before we start doing native, so -- not retrofit, but original equipment connectors in next year. But -- I mean, I think that if we continue to see what we saw so far, for sure, we'll be looking at our ability to deploy more NACS cables. But we want to just be certain about this. Everything that we've done at EVgo has been very thoughtful and very analytically based, whether it's the algorithms and site selection through to the AI in our marketing or AI agents in our marketing and customer outreach. Here, we don't want to pull out a productive CCS cable unless we're sure we can make it an even more productive NACS cable, which, again, the first site is definitely showing, but that's what we're looking at.

Your next question comes from the line of Bill Peterson with JPMorgan.

This is [ Sikuo Yang ] on for Bill. Your updated build schedule looks quite robust, especially in the '28 to '29 timeframe. Can you help us understand why the builds are so back half weighted if you have the liquidity available to you now? And how do you think about balancing the EV VIO to DCFC ratio across the market versus capturing market share early on from competitors potentially?

Yes. I mean, look, I think the -- on the build schedule, there are really 3 things that have increased the schedule versus what we last indicated, which would have been about 6 months ago after the DOE loan. Those are the commercial bank facility and the fact that we are lowering our CapEx per stall. We've been talking about it for a year, but we've never reflected that lower CapEx per stall in our long-term forecast. And then lastly, we are generating quite significant excess operational cash flow. And so, we thought for simplicity's sake, we would assume that we'd be reinvesting that cash flow into new stalls. To be honest, the reality is, as Paul said, we've actually got fairly a reasonable amount of capacity for additional leverage in the back half of this 5-year period. But regardless, we think that's a good enough proxy. And that results in a very significant increase of stalls that we deployed that we're now fully capitalized for, which I think is the important point. In terms of whether we could go faster in the very near term, the next year or 2, we really are -- we've been talking about a 12- to 18- month timeline that takes from start to finish to deploy stalls. And that's still, I think, in place. I think in the medium term, though, we are looking at ways where we can reduce that overall elapse time. We know and the market knows that it is possible to deploy at a much higher rate. We've seen certainly one competitor deploy at a significantly higher rate. And of course, we've got a lot of folks in our team from Tesla today. And so I expect that over the course of the next year or so, you may hear me provide updates on what we're doing to be able to reduce that elapse time and effectively go bigger and faster.

Maybe to follow up on an earlier question about utilization. Should we expect to see any kind of seasonality from here on out? And do you maybe expect to see increased usage by Tesla users with the NACS integration driving higher utilization over time? Also, do you recognize that also we've seen third-party reports that utilization kind of fell in the second quarter across the U.S. public network. So if there's anything else to call out there, that would be great.

Well, for sure, on the NACS cable, I mean, that's been the hypothesis that we've talked about, and so to the earlier question, we are quite excited about that. It's early days, and we don't want to get carried away. But I think it's really important just to bring out something that we've also been talking about, which is that we saw pretty healthy growth in throughput per stall sequentially, and that was because of rising charge rates. The higher the charge rate, the less the utilization we need for the same kilowatt hours dispensed. Our long-term forecast is actually only 23% to 26% utilization, but with an 80-kilowatt charge rate. And that actually translates to about a usage per stall -- kilowatt hours per stall that's about 60% greater than today. If we look back over the last 3 years, our charge rates have actually grown about 20 kilowatts in the last 3 years. And that's when we had slower chargers. 3 years ago, only 12% of our chargers were 350 kilowatt. Today, it's about 57%. 3 years ago, the charge rates in the cars were slower. So 20 kilowatts in 3 years going backwards, our long-term unit economics, as you can see in the chart, suggests a growth of just around 30 kilowatts in 4.5 years, but with faster machines and faster charging cars. And so we're -- this is a tailwind that we've been talking about, and I think we're really seeing that come through. And so it's really not just about utilization. It's really also about utilization and charge rate that's driving the throughput per stall up, and we're really pleased to see that. And to your question about seasonality, yes, we do have seasonality in charge rates typically. We have seasonality in different parts of our business. But on charge rates, they tend to be a little lower in the winter months, tend to be a little higher in the summer months. But the growth that we've seen in the last 3 years [Audio Gap] Operator, can we go to the next question?

Your next question comes from the line of Andres Sheppard with Cantor Fitzgerald.

Congratulations on the quarter. I think a lot of our key questions have been asked, but I wanted to maybe hone in on self-driving technology. As we're ramping up robotaxis and self-driving across the country, curious if you can maybe give us a sense of kind of your strategy to capture as much of this market share as possible. How are you thinking about capturing the autonomous vehicles that are ramping up? And what are some plans to maybe differentiate EVgo?

Yes. I mean, look, I mean, along with the NACS cable, I think that this is one of the 2 sources of upside in the business that's probably not in anyone's forecast. We do think it's a really interesting and potentially significant source of upside if indeed the AV space grows, which certainly it does seem as though it's going to. I know as I think you pointed out and others have, these are going to be electric vehicles and they're not looking to be charged in slow charging locations. That makes 0 sense. So we have been building and operating dedicated sites for autonomous vehicle partners for a number of years. Last year, we more than doubled the number of stalls at these dedicated sites to serve the space to 110 stalls. And we actually separated it out in our stall disclosure. And our public disclosure, it's sort of wrapped up in what we call ancillary at the beginning of this year. As Paul said in our guidance, we do expect to see a more than doubling of ancillary revenues this year over last year. And so we're pretty excited by it. We think that the kind of parties that we work with are pleased with the way that we're able to deploy fast charging speeds that are appropriate for the -- for those vehicles. Obviously, we're pretty good at it, building charging sites, whether they're public or for dedicated. And so we think that we've got a great relationship with these folks, and we're excited about the dialogue that we're having with them. And of course, now that we're fully capitalized and the commercial bank facility allows us to lever those stalls where we don't think they're eligible for DOE loan funding, we think we're in actually a really pretty good space and pretty good place.

And maybe just as a quick follow-up. Can you just remind us what are maybe the key catalysts to look for maybe in Q3 and Q4?

Well, look, I mean, we are just focused on executing the business, Andres. We're fully capitalized at this point. The charger issues that we talked about, the firmware and our choice to invest in the maintenance of some of these legacy issues is largely behind us, but we expect to be pretty much wrapped up with that activity by the early part of this Q3 period. I think that sort of just watch us execute. That's -- we're just heads down executing, and that's really what we're focused on.

Your next question comes from the line of Stephen Gengaro with Stifel.

Two things for me. The first is pretty straightforward. I'm not sure you'll want to answer. But when we think about your guidance for this year, do you think as you get into next year you'll be positive EBITDA in every quarter?

Yes, Stephen, we're not going to get into the guidance for 2026, it's just so early. But I think that if you think about what's really driving EBITDA for us, it is the measure that we've spoken about for the last year -- the last several years now, which is that throughput per stall per day, and that's rising. That continues to rise. It's rising sequentially. Yes, there's sometimes seasonality in that, again, in the winter months. It can be a little bit flattish in the kind of Q4 to Q1. But yes, that's going to be a big driver of growth in the business, and that's what we're seeing. So I think that's probably all I'm going to share at this point in terms of 2026.

And I guess the other thing, you mentioned earlier in the call in your prepared remarks about the economics of some of the chargers that are being driven by grants and maybe being a bit lighter in the beginning of the life cycle. Is that something that we will observe in the numbers [indiscernible] throughput per stall? Like just so we kind of know what to look out for. Or is it just not big enough to kind of really move those numbers around too much?

It can a little bit, Stephen. And I think that -- I think the really important point here is -- a couple of points here is that these are not federal incentives, right? So that's, I think, number one. I think that the state and utility space is very productive and supportive for EV charging infrastructure build-out. I think that the second point is that even if they're a little less productive in the first sort of periods, first few periods, these are phenomenally strong returns on capital invested. And so from our perspective, yes, we're obviously looking at EBITDA generation and very strong EBITDA margins, which is the business that we've laid out here. But it's also important to us that we're deploying capital that's delivering strong returns for shareholders on the capital invested. And I think that's what we're seeing with some of our choices. I think the fact that we've got such a large pipeline, which a lot of other smaller charging companies just don't have, allows us to move some stalls where we think we can get some great grants from one quarter to another or from 1 year to another. And that's what we saw this year where -- we did actually move some of our sites around. It forced us to push some sites from Q3 into Q4, but we thought that was worth it because the -- just the level of offsets is just so great and the returns, of course, on that capital is so strong.

And if I could ask you one other quick one. Understanding the NACS cable rollout, we -- big fans of Tesla, but not everybody is these days. Is there any targeted marketing that you're thinking about or you've done for Tesla drivers, because you see these stickers on Teslas that -- owners that are mad at Elon, et cetera. Is there -- has anybody thought about something like that you've done? Or are you thinking about any kind of campaign like that?

Yes. I mean, look, I know that this space is -- feels like it's very heavily politicized. We're running this business as an infrastructure business where we're deploying capital that's returning strong returns for shareholders and strong EBITDA generation, strong margins. We try not to get too political about stuff. We just think that's not necessarily always the best thing. However, we're very analytical. So where we're putting these NACS cables over the course of this year are in locations where we know there are Tesla drivers, where we -- those Tesla drivers, we expect will come over to our stations because there isn't a Tesla supercharger nearby. And as I said on the call today, we're just taking our capabilities to the next level. We've got these AI agents now that are creating messages, and they are figuring out which customers to send which message to at what time. And I think that we're -- that's sort of broadly what we're doing to get sort of the right level of interest at our stations at the right time. And I think that for the NACS cables, where we're attracting Tesla drivers with, frankly, charging stations that are faster. These are largely 350-kilowatt stalls that we're deploying today versus the supercharger network of 250 and closer to where they live with their amenities. We think that's a very interesting and successful -- should be a very successful approach.

Your next question comes from the line of Craig Irwin with ROTH Capital Partners.

Paul, in your prepared remarks, you mentioned the ancillary revenue progression over the next couple of quarters, the fact that we should have a pretty strong fourth quarter. Can you maybe give us a little bit of color as far as the strength that we had in the second quarter, and how that's likely to materialize relative to your execution over the last couple of months? And anything else you could share to help us understand the way this is rolling out?

Sure. Yes. So yes, we did have strong non-charging revenue overall in the quarter, both ancillary and the eXtend business. So the – with the Xtend business, I'll just talk about that one for a quick second. So what we saw was higher level of equipment sales with eXtend as our partners sought to bring forward equipment purchases. And then with the ancillary revenue, a large part of that growth is due to our hubs business. So when we set our guidance for the year -- the hubs business is a relatively new business. We're still learning what the economics could be and negotiated contracts. And so now we've got better line of sight overall into what our hubs business is going to generate this year in terms of revenue. So with the ancillary revenues, which is largely the hubs business, we expect it's going to more than double from last year, from 2024. We're expecting also to have a much higher fourth quarter as well, given some of the revenue recognition nuances in the hubs business. Again, it's largely because we now have better line of sight in the near term as to where we expect it's going to end up. There is some lumpiness to it, I will admit with the hubs business due to some of the accounting. And as we go forward and it becomes a much bigger part of our revenue mix, we'll provide more specific guidance on it that I think will be helpful.

So then Bader, you're clearly executing well versus your financial targets, right? You're delivering, and you have been for several quarters. But it does look like you're adding a little bit of expenses to the model. So maybe there's a bigger opportunity or a different opportunity set. Can you talk a little bit about your priorities as you look for opportunities for investment over the next couple of years? Real-time pricing, I guess, is one thing that's got a lot of attention over the last several months. There are several things we could touch on. What do you see as the most important areas for investment at EVgo over the next several quarters?

Thanks, Craig. I mean, look, the single biggest use of cash in this business is the capital that goes into the charging infrastructure. And so we are very focused on both capital efficiencies per stall, that's gross CapEx per stall. We've talked about vintage offsets for quite a bit here. But the first priority is on gross CapEx per stall, which we've been lowering. But I think in part of that journey in terms of your question is the investment we're making into our next-generation charging architecture. We are -- our strategy is to be able to get the benefits of being vertically integrated without being -- without the risks and the cost of manufacturing. That's why that partnership with Delta Electronics is so important. It's why the -- our taking ownership of the firmware, which is the issue that we saw in Q2 is so important. And it takes that customer experience to the next level. That is what we're investing in, and we see that investment show up in OpEx. But ultimately, it's -- the goal there is to lower our gross CapEx per stall in line with the slide that we showed earlier for the second half of 2026. But you're right, we're also investing in marketing, in customer marketing, customer approach, the databases, these AI agents. We've invested over a long period in the algorithms behind our site selection, which we think is one of the many sources of competitive advantage for us. So you picked up on -- dynamic pricing is in an area of investment since last year, again, which we can see paying off in the unit economics schedule. So we're thrilled. But I think the -- I think one -- maybe the last point to leave is that the company has tremendous operating leverage. If you look at the fixed costs in this business versus the total G&A, it's pretty high. And so once you cover your fixed costs, all of that cash flow above fixed cost falls to the bottom line. And that's why this business model is just so -- to me, so compelling. The EBITDA generation after this year is really pretty exciting. And that's what we're trying to convey when we put -- every few months when we put out these long-term financials.

Fantastic. And just another one, if I may. Firmware, you mentioned the firmware issue in the quarter. Can you maybe share with us what sort of a headwind this was on throughputs across the network? Or any other color for us to understand the financial impact?

Yes. I mean, look, we said that in July, the firmware issues, they're kind of -- at this point, they're largely behind us. We are -- we did, at the same time, decide to take some -- put some stalls into maintenance because we are seeing these issues anyway in terms of customer experience. So that will be largely addressed through the first part of Q3 But if you look at our July throughput, it was approaching 300 kilowatt hours per stall per day. And that's quite a bit higher than what we saw in the average in Q2, and that's probably a good enough proxy for where throughput -- for your question in terms of where throughput could have been.

Your next question comes from the line of Christopher Pierce with Needham & Company.

I was just wondering, is it -- are you seeing increased competition for rideshare drivers? I mean, I know it's just one article, one headline, but we talked about 40-plus stalls going in at LAX and things like that. I just was wondering if sort of more people are realizing how interesting this business is or the frequency with which these drivers have to charge.

I mean, look, it's hard because there's so many companies in the space that are private and small. It's hard to know, to be perfectly honest. When we look at our own throughput, rideshare has been pretty steady in the 20% to 25% of our total kilowatt hours for I don't know how many quarters at this point. It's usually maybe a couple of years at this point. So rideshare is going great for us. It's been a steady contributor to our kilowatt hours in aggregate. That remains the case. We're thrilled. We've been saying forever that rideshare is a significant source of upside. That's beyond that battery electric vehicle to DCFC charging ratio, which is also a macro supply- demand factor that benefits the business. So yes, we're thrilled. I mean, I think that a lot of companies, smaller private companies in this space, anecdotally, we wonder whether they'll be able to attract capital, quite honestly, just because they're smaller scale.

And can you just touch on, lastly, ASP per watt. It looked like it was up pretty smartly quarter-over-quarter, and that's after a 1Q increase from 4Q last year. I just wanted to kind of -- if you could touch on pricing power? Or is this dynamic pricing that you're kind of able to flex? Or is this people that are on a monthly plan, but because of the firmware issue, the charger that they go to was down, so you had a onetime benefit there?

So yes, we have seen our revenue per kilowatt hour pricing increase. As we've talked about on other calls as well, we're continuously testing our pricing programs, dynamic pricing. We're just talking about rideshare and trying to incentivize rideshare drivers to go off- peak and trying to influence the shape of our utilization curve as well. And it's all resulted in us having the ability watching customers' reaction to seeing how much we can move prices up. We also, though -- when we look to price, we also look at what is the revenue minus our throughput costs, which are mostly our energy costs. And so as energy costs increase or decrease, we want to make sure that we maintain a spread or widen that spread to some degree. And I think that's really the most important point in the quarter where we saw that spread increase last year from, I think, $0.29 a kilowatt hour to $0.32 a kilowatt hour, which is right in the middle of our long-term guidance. So we're kind of approaching the spread where we think long-term it could end up. But we'll continue to test these programs with customers, making sure that we're delivering value to our customers, retain them, looking at the long-term value of customers as well, not just the short-term pricing opportunities and to make sure that we're maximizing the value and increasing retention as well.

I will now turn the call back to Badar Khan, CEO, for closing remarks.

Well, thank you, everyone.