EVGO - NASDAQ

Thank you for standing by. At this time, I would like to welcome everyone to the EVgo Third Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Heather Davis.

Good morning, and welcome to EVgo's Third Quarter 2025 Earnings Call. My name is Heather Davis, and I am 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 third 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 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 delivered another solid quarter of results, furthering our position as an industry leader built for long-term success. We delivered total revenue of $92 million and record charging network revenues. We ended the quarter with almost 4,600 stalls in operation and expect to see a very large fourth quarter for stall deployment. And we continue to see improvement in adjusted EBITDA. From a liquidity standpoint, we are in a very strong position with a higher cash balance at the end of the quarter than last quarter. In October, we received the latest advance for $41 million from the DOE Loan, which is being used to accelerate the nationwide build-out of EV charging infrastructure, offering American drivers more choices on where they charge. As you recall from the last call, we closed on a first-of-its-kind transformational commercial financing facility in July for $225 million with potential to expand up to $300 million, which we believe reflects the confidence these banks have in the resilience of the cash flows generated by our ultrafast charging infrastructure. We have now received 2 draws from this facility for a total of $59 million. We've expanded our pilot for J3400 connectors, more commonly known as NACS, and now have roughly 100 NACS cables installed. We're encouraged to see an increase in Tesla's charging at EVgo. And we continue to improve returns on capital deployed by lowering net CapEx per stall with 2025 vintage net CapEx per stall now expected to be lower than our initial plan by 27%. Unlike other companies in the EV charging space, EVgo's revenue has grown consistently and predictably faster than the growth in EV vehicles in operation, growing at double the CAGR of VIO growth over the past 4 years. This is due to both market factors and company-specific factors, and we believe this outperformance of revenue growth over VIO growth is set to continue for the foreseeable future. Today's market-wide tailwinds include higher usage fueled by rideshare electrification, expansion of affordable vehicles, bringing more drivers to public charging, faster vehicle charge rates with a shift towards larger, less efficient cars. And historically, EV vehicle miles traveled has steadily closed the gap to their ICE counterparts. Company-specific factors that are driving EVgo's outsized growth include our network planning, which looks for better locations with high utilization compared to the rest of the industry, building better charging stations and our expanding network effect of more than 1.6 million customer accounts. The third quarter saw a historic number of EV sales in the U.S. ahead of the federal tax credits expiring. While we won't speculate on the level of EV sales in Q4 and 2026, it will result in an ever-increasing number of EVs on the road. Although EV projections today are lower than in the past, the latest forecast for EV VIO growth remains strong, albeit with a slower rate of growth. Our charging revenue forecast based on our updated unit economics and forecasted store growth we discussed last quarter also conservatively assumes a lower rate of growth than we delivered historically and yet still represents 3 to 4x annualized growth from today. As we noted earlier, we are nearing a critical milestone, delivering breakeven adjusted EBITDA, which we expect to achieve in the fourth quarter. Over the past 4 years, quarterly revenue and gross profit have accelerated 15 to 19-fold, whereas quarterly adjusted G&A has only grown modestly because most of our G&A is actually fixed. As a result, we are predictably reaching adjusted EBITDA inflection to positive in the fourth quarter. But after this inflection, EVgo has 2 sources of operating leverage that will position us for accelerated adjusted EBITDA growth in the future. First, and something we have been benefiting from over the past 4 years is that we have leverage within our charging network cost of sales. Approximately 28% of our cost of sales is fixed on a per store basis. So as throughput per store grows, so does the charging network gross margin. These fixed costs on a per store basis include rent and property taxes. Secondly, once store-based cash flow or charging network gross profit less sustaining G&A exceeds the total of growth and corporate G&A, which are largely fixed, all profits from the charging network fall straight to the bottom line, accelerating adjusted EBITDA growth. With approximately 2/3 of our G&A cost base largely fixed today, this represents very strong operating leverage. In fact, excluding growth G&A, EVgo is already adjusted EBITDA positive, but we are choosing to incur growth expenses given the strong returns associated with deploying new stores. Making this even more attractive for investors is that we have the financing in place through 2029 to deploy all these new stores without the need for any additional equity capital. The expected result is a very attractive business by 2029 with $0.5 billion in adjusted EBITDA at mid-30s adjusted EBITDA margins. For almost 2 years, EVgo has been delivering one of the highest levels of network usage across the industry. Again, this is driven by both market and company-specific factors. Average daily throughput per stall is an important KPI to view network performance, and it is growing, driven by both time-based utilization as well as charge rates, both of which have been growing for the past 4 years. Rising charge rates are a significant tailwind we benefit from as higher charge rates deliver more kilowatt hours at the same utilization level and tend to result in higher levels of EV adoption, in turn, increasing demand for our fast chargers. Higher charge rates also improve returns on capital deployed because they allow us to dispense more kilowatt hours from the existing assets without the need to deploy more capital. Higher charge rates come from improved battery technology and EVs, as well as EVgo deploying more 350-kilowatt ultrafast high-powered infrastructure. Average daily throughput per stall has grown more than sixfold from less than 50 kilowatt hours in Q1 2022 to 295 this quarter, and we conservatively assume only slightly higher utilization by 2029, but with rising charge rates, we expect to see 450 to 500 average daily throughput by 2029. This higher throughput per stall, combined with many more stalls deployed is what has been and will continue to drive growth in revenues. Not only have we been delivering some of the best performing usage across the industry, we're focused on ensuring our chargers perform to their maximum potential and can maintain increasing utilization rates. Today, nearly all stores deployed are 350-kilowatt chargers, which delivered almost 60% of our throughput in the quarter. These chargers are the most representative of our expected future network since we estimate well over 90% of our throughput in 2029 will come from these chargers. Utilization on the EVgo network has surpassed others in the industry, our expectations and the expectations of the equipment providers. This high usage placed stress on our Signet chargers, which were the first 350-kilowatt chargers we deployed. After performing root cause analysis in conjunction with Signet in 2024, we embarked on a number of tech enhancements and a year later, Signet chargers are performing very strongly with usage already close to our long-term target in 2029. We are now at a similar junction with our Delta chargers, which have comprised almost all new builds since 2024. EVgo is embarking on the same kind of tech enhancements we did with Signet, and we're confident we will see the same strong performance step-up as we've seen with the Signets. As an industry leader, we are focused on ensuring we have the best quality hardware through ongoing maintenance, periodic enhancement of specific components and our next-generation charging stations, which we are actively developing at our innovation lab in El Segundo. Our new generation of charging architecture is being designed not only for a better experience and lower cost, but also being developed and qualified for these higher levels of utilization from the start. This project is being led by the EVgo team and features a robust design for reliability methodology, including best-in-class hardware design and software, taking into account our learnings from our 15 years of experience in EV charging and over 1.6 million customer accounts, all of which sets us apart from the rest of the industry. The next generation of charging architecture is expected to lower our gross CapEx per stall by over 25% in 2029 versus 2023, delivering even stronger returns on capital deployed. In the meantime, we've been driving down both gross and net CapEx per stall over the last 3 years. In 2025, vintage gross CapEx per stall is expected to be 17% lower than 2023, driven by savings from lower contractor pricing, material sourcing and increased use of prefabricated skids. When you include capital offsets, our CapEx per stall is expected to be reduced by 40%, resulting in vintage net CapEx per stall of $75,000. 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 despite the fact that federal incentives for EV charging will sunset in the summer of 2026, state grants and utility incentives are alive and well. As we said last quarter, in order to capture some of these state grants, a certain number of stores that were due to be operationalized in the second half of the year have shifted out by a few weeks, lowering the total number of stores that we expect to deploy in calendar 2025. Our long-term expectation is to continue lowering gross CapEx per stall as a result of our next-generation architecture, but we conservatively assume we do not have a same level of offsets as we've seen in the past couple of years. Let's now briefly turn to progress on our 4 key priorities: delivering a best-in-class customer experience, operating in CapEx efficiencies, capturing and retaining high-value customers and securing additional complementary nondilutive financing to accelerate growth. As we discussed earlier, our next-generation charging architecture will take our customer experience to the next level. We've completed the enhancement of a number of components in our Signet 350-kilowatt chargers and are now embarking on a similar campaign for our Delta 350-kilowatt chargers. In terms of efficiencies, while the next-generation charging architecture is expected to deliver CapEx efficiencies by 2027, we're making great progress in the near term, too, lowering 2025 vintage net CapEx by 27% versus our plan for the year, and we continue to see a reduction in G&A as a percent of revenue for 2025 versus prior years. The EVgo app has now reached an overall rating of 4.5 on the Apple App Store, which is a key threshold above which we would expect to see accelerated organic customer acquisition, and we're thrilled with reaching this milestone. Our NACS pilot has continued to expand from 2 sites last quarter to almost 100 stores as of the end of October. In this pilot, we continue to test our ability to attract native NAC vehicles to our network and we remain encouraged by the higher number of Tesla drivers at these stores than they had prior to installing the NACS cables. This is a key part of our iterative learning process before a much wider scale rollout plan for 2026. And on financing, we've made excellent progress this year between continued advances under the DOE Loan, closing the sale of our 2024 Vintage 30C portfolio and of course, the transformational first-of-its-kind commercial financing facility. As we noted earlier, we expect 40% capital offsets for the 2025 vintage CapEx. We have the financing in place to increase our annual store build to up to 5,000 stores a year by 2029 without the need for any new equity capital. Now, Paul will share more detail on our third quarter results.

Thank you, Badar. Operational stall growth is one of the key components of growing EVgo's revenue. We ended Q3 with 4,590 stalls in operation, a 2.7x increase compared to the end of 2021. Our customer base has grown almost fivefold over that same period, which contributes to the network effect driving increased usage on our network. We've grown the total energy dispensed on EVgo's network to 350 gigawatt hours over the trailing 12 months, a 13-fold increase over that same period. Revenues of $333 million over the last 12 months have increased over 15x since 2021. Charging network gross margin has grown from the mid-teens to the mid to high 30s, reflecting the leverage of fixed cost of sales on a per stall basis as throughput per stall rises. And importantly, we continue to deliver improving profitability and adjusted EBITDA margin has made significant improvements driven by increasing revenues, leverage of fixed costs and disciplined cost management. Total throughput on the public network during the third quarter was 95 gigawatt hours, a 25% increase compared to last year. Revenue for Q3 was $92 million, which represents a 37% year-over-year increase with growth in all 3 revenue categories. Total charging network revenues were $56 million, exhibiting a 33% increase. eXtend revenues were $32 million, delivering growth of 46%. Ancillary revenues of roughly $5 million were up 27%. Charging network gross margin in the third quarter was 35%, up 1 percentage point. Third quarter adjusted gross profit of $27 million was up 48% versus the prior year. Adjusted gross margin was 29% in Q3, an increase of 230 basis points. Adjusted G&A as a percentage of revenue also improved from 40% in the third quarter of 2024 to 34% in Q3 of this year, demonstrating the operating leverage effect. Adjusted EBITDA was negative $5 million in the third quarter of 2025, a $4 million improvement versus the third quarter of 2024. Now turning to our 2025 guidance. We anticipate some of the public and dedicated stalls we forecasted to be operationalized in December will now be open in January 2026. As such, our EVgo public and dedicated stall expectation for the year is 700 to 750. This shift in deployments to January will be reflected in our 2026 guidance, which we expect to issue with our Q4 results in early 2026. However, we are increasing our expectation of the number of eXtend stalls operationalized this year to 550 to 575 due to the great progress we've been seeing all year with our partner, Pilot Flying J. As a result, Q4 is expected to represent a very big quarter for newly operationalized stalls. Overall, we will deploy slightly fewer total stalls in 2025 compared to our guidance in Q2. However, the mix has changed with fewer public and dedicated stalls and more eXtend stalls. We have not only been focused on capital efficiency, but also reducing the length of time it takes for us to develop and build stalls. As a result, we now expect fiscal net CapEx for 2025 in the range of $100 million to $110 million driven primarily by less spend this year on 2026 [indiscernible] stalls. We are now forecasting a wide range of outcomes for the fourth quarter and full year than we normally would, substantially due to a potential contract closeout payment to EVgo in relation to dedicated stalls we were building for one of our autonomous vehicle partners that has decided to exit the robotaxi business. There is currently uncertainty on both the quantum and timing of these payments. And because this amount could be very significant, we are issuing a baseline guidance that does not include this item and an upside guidance that includes it. Our prior revenue and adjusted EBITDA guidance did assume a smaller range from this matter in 2025. As the matter has progressed, we now believe the range of outcomes could be much wider. In addition, the matter may not be concluded this year and may slip into the new year. For the full year 2025, we expect total baseline revenues will be in the $350 million to $365 million range with baseline adjusted EBITDA in the negative $15 million to negative $8 million range. Our baseline revenue and adjusted EBITDA guidance are relatively in line with our prior view, excluding our prior estimate for the ancillary upside. Including the ancillary revenue upside of up to $40 million, 2025 revenues are expected in the range of $350 million to $405 million, with adjusted EBITDA in a negative $15 million to positive $23 million range. There are a few moving parts for the implied Q4, so let's unpack those a bit. Charging network revenues are estimated to be near 60% of total revenues for the full year, in line with prior guidance. We're anticipating continued sequential improvement in the fourth quarter. We expect the 2025 charging network margin profile to be consistent with 2024. Fourth quarter charging network margin should improve compared to Q3 '25. Our eXtend business with a pilot company continues to perform better than expectations. Full year eXtend revenues are anticipated to be approximately 30% higher than prior year eXtend revenues, slightly higher than prior guidance. We'll be more than halfway through the build program with pilot by the end of this year and thus expect 2026 eXtend revenues to be similar to 2025. Ancillary revenues are expected to grow significantly in 2025, driven by our dedicated hubs business serving other autonomous vehicle partners. Baseline ancillary revenues are expected to show at least 50% growth before any potential upside. Adjusted G&A for 2025 is expected to be approximately $125 million to $127 million for the full year. In 2026, we're continuing to invest in growth, therefore, anticipate G&A increasing by approximately 20%. We expect to achieve adjusted EBITDA breakeven in the fourth quarter at the midpoint of our baseline guidance. This is a significant milestone for the company. Operator, we can now open the call for Q&A.

And your first question comes from the line of Chris Dendrinos with RBC Capital Markets.

I guess maybe to start out here, and you mentioned some commentary around the EV demand outlook, and I know you wouldn't comment on it. But maybe could you kind of walk through how you're thinking about EV demand in relation to your longer-term outlook? And what are the puts and takes that would maybe make you slow development down or speed development up?

Yes. Chris, look, I think EVs -- the number of EVs on the road have grown, as you can see, three to fourfold in the past 4 years. Today, there's around 100 battery electric vehicle models available, and that's -- it was probably about 30, 4 years ago. We see these cars are increasingly affordable and just great cars to drive. I think in some ways, EV sales forecasts sometimes to me anyway feel like a pendulum swimming back and forth. They were probably too high a few years ago and maybe the pendulum swung back and maybe it's too low today, driven by a view of these incentives that have just expired. I actually think that we'll see higher sales than what the current forecasts show because the cars are -- they're just great to drive. They're -- in many cases, they're getting better. And I think it's just a matter of time before they're cheaper. As it relates to our business, the way we think about our charging stalls is, of course, whether we're able to generate the kind of strong returns on capital that we're generating today. You can see or most people can see that we're at 2 to 3-year payback here. As we look at the market, we think about the ratio of cars per fast charger nationwide. And over the last several years, that ratio has been growing, meaning there is more upside on usage per store. And that's, in fact, what we've seen. We've seen our usage per store go up sixfold. We don't see that picture getting any worse than today. And therefore, we -- if it gets better to today, then that's even better for us. If it's no worse than today, we will expect to be deploying charging stalls that are generating the kind of returns that we are today. And that's how we think about the capital deployment in the business.

Got it. And then as a follow-up, you mentioned you're seeing an uptick in Tesla's charging on your network with the rollout of that NACS cable. Can you maybe kind of quantify here what you're seeing early days?

I would say it's still a little too early to quantify or to give you a real quantification. We've gone from a couple of sites that we talked about last quarter to almost 100 cables as of the end of October. Team here and myself are pretty excited about what we're seeing. Tesla driver usage is higher at these sites than they were pre-installation. These are all retrofit. I expect that we will do what we've done in everything else in the business, which is sort of very databased analysis of the situation where if we are continue to have the kind of confidence we have today that we're able to put these retrofit cables at sites that are targeted sites close to where we believe Tesla drivers live and work and run [indiscernible] and we continue to see that sort of Tesla usage rise, we'll look to scale rollout in 2026. I think we'll keep it at this sort of 100 level for another quarter or so, make sure that we remain confident in the results and then really scaling it out next year.Your next question comes from the line of Bill Peterson with JPMorgan.

I realize you're going to provide more granularity on stall guidance for next year. You gave some framework for eXtend. But if you look at the guidance, assuming some of the pushouts into next year, your prior guidance from the middle of the year was around, I don't know, 1,400 or so, 1,350 to 1,500 at the midpoint. I guess, conceptually, should we think of that coming in lower, maybe perhaps towards where you had provided guidance at the start of 2025, which was more in the 1,000 to 1,200 range. I'm just trying to get a sense of how we should think about that as well as really the build plan over the next 5 years. Should that be tracking more like what we saw at the start of the year? Just trying to get a sense given the realities that we may be probably see a negative year-on-year growth for EV demand maybe for the next several quarters.

Yes, hey, Will, we haven't yet provided guidance for 2026, as you said. But I think looking back to what we said last quarter is actually a useful starting point. And on our call last quarter, you're exactly right. We said that we would expect to see 1,350 to 1,500 stores for 2026. And to be clear, that was our owned and operated stores at 1,350 to 1,500, that's our public network and our dedicated stores. So that's about double the rate of growth that we're at today. This year in 2025, the larger number that you mentioned includes our eXtend stores. So, we were at the sort of 800-ish public and dedicated plus eXtend for 2025. We now see 2025 a little bit lower, more extend, a little less public and dedicated. But on the public and dedicated side, it's -- we would be looking at about a doubling of where we're at this year for 2026. So, we're pretty excited by it. We're generating the kind of returns that we expect that we've been talking about for the last couple of years or the last several months or last several quarters. And as long as we are generating those kind of returns, then we expect our shareholders would want us to deploy that capital.

I'd like to try to understand this ancillary upside a bit more -- and just to be clear, this was not contemplated in your prior guidance, right? So -- and then if that's the case, trying to get a sense of what this closeout could mean for future revenue impact. In other words, was there some sort of expectation that this dedicated fleet customer would have been continuing beyond 2025? Any additional color would be helpful here.

Yes. So, we had assumed a smaller range from this contract close out in 2025 in our prior guidance. It was in the $10 million to $15 million range. And so, if you look at our guidance today, we're pretty much at the same place as we were last quarter. So, if you just take today's baseline guidance, excluding our updated view, add on the $10 million to $15 million that we assumed in our prior guidance, and you're at pretty much the same place. In terms of the update, it's a larger range. So the upside is quite a bit higher than we had thought earlier in this year, but also there could be a timing issue where it occurs, it slips into next year. We don't assume that this is a recurring thing, Bill. So, this is -- we consider this a one-off, and that's why we're separating it out. So, you can see the very strong trajectory of the underlying baseline business.

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

Two things for me. I guess the first is you talked about fourth quarter and maybe getting to EBITDA breakeven at the midpoint of your guidance. Can you just remind us as we sort of think about seasonal patterns as you get into '26 without specific numbers, should we be thinking about this as when you get there, you should stay there and then progress from there? Or are there some seasonal noise we should be contemplating in our models just to make sure we're in line with how you're thinking about things?

Yes. Let me talk about the seasonality point in just one second, Stephen. The -- but you're right, the company has maybe at a macro level, very strong operating leverage, where around 2/3 of our G&A is kind of largely fixed. And so, when the growing profits from the charging network exceed those costs, all that profit goes straight to the bottom line. I'm talking about charging network gross profit less sustaining G&A. And that's the point where EBITDA really accelerates. Looking back, that's how we've gone from an $80 million loss to approaching breakeven. And it's really how we get to $0.5 billion in adjusted EBITDA in 4 to 5 years' time. And to your question more specifically around the near term, in Q4 this -- in Q3 and in Q4 this year, we still have gross profit from our non-charging businesses that are helping to cover those fixed costs. But in 2026, the charging network profit, so again, that's charging network gross profit less sustaining G&A will be higher without any contribution from our non-charging business to cover those fixed costs. And that's where we see things really accelerate. We think that will be in the second half of next year. In terms of the seasonality point, we do have seasonality. We do see it in terms of vehicle miles travel. So, there's a little less VMT and therefore, a little less throughput per store per day in the kind of Q1 in the winter than in the summer. We also see seasonality in terms of charge rates. Charge rates tend to be a little lower in the winters than in the warmer summer months. And we also see seasonality in terms of gross charging gross margin where we have higher cost of sales, energy cost of sales, higher tariffs in the summer months. So those are probably the main sort of seasonality things that we see. And as I said, once that charging network gross profits exceed fixed costs, that's the point where you see the EBITDA growth just really accelerate, and we're getting closer and closer to that point if we standby.

Great. And then my other question was just around industry dynamics. And how do you think about -- I mean, you've laid things out very well as far as your plans through '29. How do you think about just the number of players in the industry, industry consolidation in the U.S. market? And how do you think that plays out over the next couple of years?

Yes. I mean, look, we are -- we think that we've got a number of sources of competitive advantage where specifically, we focus very much on site selection. So, building sites where drivers are and as a result, generate the kind of returns that we're generating today. We do not see that across the rest of the industry, either they're people are focused on chasing federal grants that may not necessarily be the most productive sites or their goal isn't necessarily to maximize returns on charging, but in terms of encouraging people to buy electric vehicles. We know that charging or range anxiety is alongside the upfront price, one of the 2 biggest reasons for even faster adoption of electric vehicles. And so, some companies are focusing on building charging stations to sell cars. When we think about -- we've got scale -- that translates to advantages in customer experience, the remote monitoring and diagnostics, the kind of marketing and dynamic pricing I talk about every quarter, the supply chain relationships, we talked about those relationships on the call today. These are not things that we see with the rest -- with many others in the space. The average number of charging stations across this industry amongst our competitors are significantly smaller than us. And so, when I think about these advantages, next-generation architecture, our balance sheet, it seems to me that we'd expect to see a smaller number of other peers in the network in the industry. I'm thrilled when we see our peers building charging stations because that will ultimately encourage EV adoption. And as I said before, I expect that will result in more throughput per store for our network because we've got faster charging stations and better located sites. So that's maybe one way of thinking about this landscape.

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

So Badar, I was hoping we could dig in a little bit more on the experience you're seeing out there with the new NACS connectors, right? This is an exciting opportunity for you given the size of the Tesla fleet and that it's early days for the OEMs to cut over to the NACS connector where they're heading longer term. Can you maybe unpack for us what the actual utilizations are or early experiences on utilization around NACS? I mean, are you seeing the Tesla drivers come back repetitively to the same locations, use multiple locations? And how should we think about the build here and the tempo? And what would you use to guide your change out of additional locations in the future? Are there specific data points or other metrics you would use to guide the adoption of these cables?

We completely agree with you that the upside here is quite significant. As you said, and we've talked about in prior calls, there are -- there's a significant amount of the vehicle fleet that are Tesla vehicles that are generally not charging on our charging stations. And so being able to access roughly half of all the IO it was just a giant step-up for us. And so, we're pretty excited by it. We also know that switching out a CCS cable that is very productive. I mean we can see we're at an average of almost 300 kilowatt hours per stall per day across the network is not something that we want to -- it's not something we want to take for granted. And so, we are being very thoughtful about switching out the CCS cables with these NACS cables. It does take us a few months to ramp up throughput per stall on our CCS cables with drivers that are very familiar with EVgo. And so, we want to make sure that we're being thoughtful about that switchover and attracting Tesla vehicles. In the early part of the year, it was all about making sure that we've got cables that can withstand the high power. So, these are liquid cool cables, and we've got the right technology, and I think we've proven that. We've gone up to 100 cables as of the end of October, and we're going to spend some months now making sure that we're learning everything we need to be learning in terms of all the questions that you asked, what is the behavior of Tesla drivers in terms of the charging stations, repeat at the same location, other locations, how are they identifying EVgo stations? How can we help them to identify and locate our stations even better. We expect in 2026, when we issue our guidance that this will be a fairly key part of our store rollout schedule. As I said before, I expect a lot of the 2026 will be retrofit. I do expect to be a scale rollout of the NACS cables next year, again, attracting roughly half the market that isn't really charging in our standard network today. That could be a big source of upside. And for the new stations at some point in 2026, perhaps around the middle of the year, new charging stations from the get-go, not just retrofit will include the NACS cables. But you're going to have to wait until our guidance for 2026 before we reveal that. As always, Craig, I think as you've seen, we're going to be pretty thoughtful and pretty analytical about all this.

Understood. That definitely makes sense. So, my next question is about dynamic pricing. In your past couple of calls, you'd shared some real points of success where that's actually driven much better utilization for the network and the overnight. Can you maybe share some more detail with us on where you stand with dynamic pricing, the peak-to-trough variance in rates, the geographic success? What should we be looking at to understand this business and what it could mean for EVgo over the next number of quarters?

It's super exciting, Craig. We've got first -- I will call it a sort of a first version or 1.0, if you will, of dynamic pricing across our entire network. We rolled that out, I want to say, throughout 2024, maybe late 2024, I should say. And we have it across all geographies, across all charging stations. There is some -- there are some limitations around the number of combinations of prices and the frequency of change, which will come through our next version -- our next iteration of dynamic pricing. We were expecting that to be in the fourth quarter of this year, Craig, but we've got such a large fourth quarter build-out. I think as you will have heard from Paul, we've got about 350 to 400 stores that we'll be deploying. This is public and the dedicated stores. So, the owned and operated network in the fourth quarter and the eXtend stores on top of that, we felt that it was more sensible to get -- not to try and take on too many things. So, the next iteration of our dynamic pricing will get rolled out in the first -- at the end of the first quarter of next year. In terms of what the impact is, I mean, you can see our revenue per kilowatt hour is pretty flat. We're growing throughput per store. We're obviously very happy about that. We see double-digit utilization in the overnight hours which I think is pretty extraordinary. We're talking about 3:00 in the morning. A lot of that is all through dynamic pricing and our approach to the way that we communicate with our customers, so shifting usage from peak times to off-peak or overnight hours. And these are all the kind of things that we're deploying that results in growing throughput per store, growing utilization while minimizing wait times or queuing times and providing opportunities for customers to charge at rates that are appropriate for them.

If I could sneak in a third one. The autonomous vehicle fleet out there is growing, right? There's many more cities where we're seeing adoption and vehicles training, new vehicles in commercial operation, but many cities training. And I'm going to guess that some of these leading companies are using the EVgo the EVgo network or at least their own proprietary stations built and managed by EVgo. How does revenue recognition work for you on these things? When they're in training, are they actually generating revenue already on the EVgo network? Are they already customers? Or do we see site commissioning when they go commercial? And how do we think about fleet growth correlating to demand growth for EV? Is this something that should be sort of 1:1? Or is this something that happens sort of in increments or steps? Any color there for us to understand the -- how these businesses are interconnected?

Yes. Look, the both of that point and the autonomous vehicles are the 2 big sources of upside for the company over the coming years. And we completely agree with you that we see that autonomous vehicles is a potentially very significant and very interesting source of upside. I do see the space growing potentially very quickly. These are all electric vehicles, and they'll all be needing to be charged at fast charging sites, not slow charging. And yes, we are working with all the leading players in the EV space -- in the AV space in terms of building dedicated sites for these AV partners. Today, the way that we are contracting with them, we've got effectively a monthly rent, so dollars per store per month from when the store is operational, whether anything is charging there or not. And that's the nature of the contracts today. These are -- we're in the foothills, in fact in my mind, in this industry. And so, the structure of these contracts may very well evolve or very likely to evolve over the coming years. But that's the way that we're contracted. In terms of revenue recognition, it's -- these are long-term contracts. And so there's typically a gain on sale with this long-term revenue stream that's recognized when the store goes live or around when the store goes live. Anything else, Paul, in terms of revenue recognition that is important here?

No, that's good. That's pretty much how it works. They are long-term contracts with basically a fixed fee, a fixed monthly fee. That's the cash flow that we receive. But because they are long-term contract or some of them are, I shouldn't say they all are, but some of them are long-term contracts under accounting, it's considered to be a deemed sale, so sale lease accounting. So, with some of them with the longer-term contracts, we do recognize a gain on sale of the construction costs. So, there's a markup to what we think is fair market value for this site and then that gain is recognized when the site goes live when the customer -- the client takes over -- the partner takes over the site. And then after that, it is basically the operating cash flows for maintaining the site that we receive. When we have that gain on sale, we're bringing forward some of the economic value. And so that creates a receivable. So then when we receive the money in, we draw down that receivable over time over the life of the contract. So, it's a bit tricky. I know we said last time, we'll do a webinar or teach-in on how it all works, we'll just sort of provide annual guidance as to where we think in total those will come.

Excellent. Well, you've confirmed for me that it's an exciting business, and I think that's what investors really mean. So, congratulations on the progress across the board.

And your next question comes from the line of Brett Castelli with Morningstar.

Just sticking with autonomy, I wanted to come back to this contract closeout here that you talked about and really understand more medium and long term. Does that at all impact sort of the prior range of expectations you gave us in terms of stalls and build-out for that particular part of the network?

No, it does not. So, the range that we provided last quarter on the last quarterly earnings call for public and dedicated build targets remain valid, remain the same as they are. As Bill asked upfront, next year, we were looking at 1,350 to 1,500 public and dedicated. The majority of that is public. We have not yet broken out how many are public versus dedicated. Dedicated are these stores for autonomous vehicle partners. As Craig said, I think that, that remains a very, very exciting and very interesting source of upside. We just need to make sure that the -- if we are doing a significantly more dedicated stores that they are meeting our return expectations. The economics are attractive for us. We can see very strong and very attractive economics for our public network. And so, the contract close out, there's really one company that was going to get in the robotaxi space in a pretty big way that do exit, but there are many others that are building out these businesses and we're working with them all.

Okay. And then I just wanted to ask on the charging network gross margin. We've seen more muted margin expansion within that line item here in 2025. Can you remind me for the drivers behind that? And then how we should think about margin expansion within that line item in 2026?

Yes. So, maybe I'll just start and then, Paul, I can ask you just to sort of provide further details. We are seeing charging network gross margin expand, Brett, year-over-year. There is seasonality. So Q3 is seasonally the lowest margin percent typically quarter over the course of the year because we got the higher summer tariffs. We saw that last year. You see that this year. This year is higher than last year year-over-year. And the operating leverage, we've got 2 sources of operating leverage, one in the G&A, which we talked about earlier and then operating leverage within the charging network cost of sales where about 30% of that is fixed. And so as usage per store grows, that margin just expands. And that certainly we fully expect to see continue over the next several years. But Paul, any other color or any other detail that might be helpful in the near term?

Sure. Yes. So, when we look over year-over-year and say, I'll talk about Q1 '24 first. So, in that quarter, we did have a large amount of breakage revenue, which has got 100% margin. So that's customer credits. When they expire, we recognize that as revenue and as margin, and that increased Q1 '24. If you took that out and then just looked at '24 by quarter versus '25 by quarter, it generally shows an increase, a couple of percentage point increase quarter-over-quarter. And then if you look at where we are in Q3 '25, 35%, which is about 1% increase over '24. In '24, that increase from Q3 to Q4 was 6 percentage points. And in the prior year, it was about 5 percentage points. So, we would expect Q4 '25 to follow a similar pattern and be 6, 7 percentage points higher in Q3 this year. And we see that pattern moving -- continuing to move up steadily as we've shown in our -- as we get the operating leverage as we've shown in our unit economics as well. So, when you correct for a couple of those things and look at the that quarter-over-quarter and think about the seasonality, I do think you see improvement.

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

Just one question for me. If I look at last quarter, if we calculate ASP per kilowatt, there was a mid-double-digit increase and then it's kind of a high single-digit increase kind of moving down sequentially in the third quarter. I just want to understand how to think about the pricing levers you guys are pulling and how bill to pull kind of going back to Craig's question on dynamic pricing? Or is it that OEM revenue sort of distorted things in the second quarter and made things look a little more robust than they actually were. I just kind of want to get a sense of pricing across the buckets there and how to think about ASP per watt.

Yes. Paul, do you want to take that?

Yes. So, when I look at the pricing charging revenue overall, I see Q2 versus Q3 to be broadly flat, and I see, of course, the costs energy costs, in particular, increasing in Q3 as we talked about because of summer tariffs, the seasonality there. So, we see a bit of a squeeze in the margin in Q3 as expected. But as I mentioned before, our pricing has been generally pretty steady, and our margins have been showing a general increase overall, which we expect to continue into Q4 and follow a similar pattern into '26 as well. There is some mix effect when we look at pricing, we have to think about where the volume of energy is coming from and being dispensed to. But it's been broadly flat across the portfolio in the quarter.

There are no further questions at this time. I will now turn the call back over to Badar Khan for closing remarks.

Great. Well, look, thank you, everybody. We had another solid quarter of great operational performance and hitting strategic milestones. We can clearly see that we're nearing the inflection to adjusted EBITDA breakeven. And with the operating leverage that we have, we can see accelerated EBITDA growth coming soon. And I look forward to sharing that progress with you on the next call. Thanks, everybody.