Christopher Pierce: I was hoping we could drill down a bit on gross margins. I know gross margins were down this quarter because of less equipment sales. But — could you speak to where gross margins are as far as selling kilowatts, roughly where they are now and where they could go in the future? And is it possible to kind of get a level of — like if we exclude equipment sales, like what level of network throughput would EVgo need to be adjusted EBITDA positive?
Olga Shevorenkova: So let me start with gross margin. So we are — we are looking — so you’re looking at GAAP gross margin. The GAAP gross margin has a bunch of depreciation and amortization, so it’s a lot of noncash expenses. When we’re managing the business, we’re looking at adjusted gross margin. That’s the number we are reporting and we clearly saw an expansion this quarter versus last quarter versus last quarter this year. So we reported 26.4% which is caused by higher utilization on our network, which allows to fully exhibit the leverage effect. And amortize some of the net fixed cost. So that’s kind of a comment on that. On a GAAP gross margin, while we’re seeing a lower number than last quarter. So that you’re absolutely right.
That’s a revenue mix. We had a higher portion of eXtend revenues, last quarter — eXtend revenues kind of don’t have attached depreciation amortization to them. That’s why you’re seeing that. But again, adjusted gross margin is probably a better number to look at to measure the progress of the business. It’s a consistent number, and you can — we report it every single quarter. Now when we’re talking about adjusted EBITDA neutrality, we clearly approaching it as you might see from the recent trends. We — if you compare this quarter versus quarter — this quarter last year, our G&A as a percent of revenue has tremendously come down from 230% of revenue to 67% of revenue. So that’s a clear illustration that we’re in the path to profitability.
When exactly it’s going to happen, that will happen in the next couple of years. The exact moment we will be talking to the market about this in the coming months and update the market fully on that. And that’s probably as much as I can say right now.
Christopher Pierce: Okay. Just at a high level, is that the right way to think about the business? You’ve got these equipment partners right now. And then as those kind of — as that gets built out in the later years, it’s going to be about margins on electricity sales to drivers. And that sort just to confirm, you’re going to — that’s something you’re going to give more detail on maybe in the coming in the first half of next year, you said, or at a later date?
Olga Shevorenkova: Yes. So the…
Christopher Pierce: Is that not the right way to think about the business? It’s sort of going to work together…
Olga Shevorenkova: It’s a combination of factors. So electricity margin is absolutely the fact and electricity margin is dependent and our pricing is dependent on composition of network locations because electricity costs are widely different across the country. It’s dependent on our efforts on getting ourselves on EV rates, which are usually more favorable. But then there are other factors. You have always energy costs, but you have non-energy costs built into our cost of goods sold and overall network costs such as maintenance, AT&T and Verizon connectivity charges, some software charges, call center and so on and so forth. So those items a semi-fixed in the nature and our ability to cut costs on a per stall basis is what driving the margin or maintaining the costs that would driving that margin as well.
So it’s not all just about energy costs, it’s not all about the price and you have some other costs. So the right way to think about it is looking at energy margin, looking at pricing, but also making sure that we, as a business, are able to optimize for those semi-fixed costs as well on the network. That would inform the margin. So the margin right now, 26.4% adjusted gross margin basis. We had 15% utilization this quarter. The utilization is expected to go up as we all hope. So that margin, you should expect to see that number expanding with high utilization on the network.
Operator: Your next question comes from the line of Andres Sheppard with Cantor Fitzgerald.
Andres Sheppard: Good morning, everyone. Congrats on a strong quarter. Cathy, I echo everyone’s thoughts, you will be missed. I wish you all the best in your future endeavors, and we’ll certainly miss your EV industry updates in the earnings call. But we are looking forward to working with you as well. Cathy, maybe a question for you. We’ve seen some of the large OEMs out there Ford, Mercedes, Tesla, even to some degree, talk about this potential slowdown in the demand for EVs at least in the near term. Curious just maybe to get your thoughts on that and how that might translate into the charging industry and in particularly into EVgo.
Catherine Zoi: Yes. Thanks, Andres. And I’m just talking to you on these quarterly calls as well. So yes, what’s fascinating is that the slowdown is relative to a giant that is talked about is kind of modulated slowdown from some vertical growth. So we’re still looking at them. I mean, by all industry accounts, 40% to 60% growth next year in a slower market. And for any other sector that would be viewed as like, “Oh, my goodness, gracious it so fast. We’re going from 3 million EVs today, to 5 million to 6 million by the end of 2024, and up to 35 million by 2030. So it is — it remains a very fast-growing sector. The modulation of that is, again, we can actually lean in a little bit more to go a little bit more quickly on deploying stations more quickly if we need to.
And we can pull back just a little bit if it’s going to slow down just a little bit. I mean, truly, I actually do love the Gretzky metaphor. And so for us, it’s still like it really is up and to the right. And whether 2024 is a little bit slower, all of the OEMs are building capacity to make hundreds of models of EVs. There’s no denying that. So what happens in 2024 if because interest rates are high and overall EV sort of sales are down. I guess it just doesn’t terribly worry us. The macro trend is still really, really strong and as evidenced by what we saw on the utilization trends right now, right? So to be a leading provider of essential infrastructure for an increasingly hungry set of people that need fast charging is a fantastic place to be.
Andres Sheppard: Got it. That’s super helpful. I appreciate all that. And maybe as a follow-up, I have a bit of a 2-part question. So with — in regards to NEVI, I think we would all probably agree that the deployment of the funds has been maybe slower than most of us would like. So I’m just curious if you can just remind us of your run rate with your current liquidity on hand. I think in the past, you had said that’s sufficient to fund the business into 2025. So I just wanted to confirm that? And then if I just could also wanted to add, with inflation and higher interest rates, I’m curious to get your thoughts on how you see the energy ASPs fluctuating next year? Should there be somewhat of a considerable step-up in that cost? Or just curious to get your thoughts there.
Olga Shevorenkova: Yes. So we’re confirming with the current cash on the balance sheet and with the combination of some of that funding we talked on the call earlier like grants, funds which we already secured and just about to collect. We are well financed well into 2025. We don’t need any extra capital until that moment. On — sorry, do you mind repeating the second question.
