Blink Charging Co. (BLNK) Earnings Call Transcript & Summary

Welcome to today's fireside chat. Today with us, we have Mike Battaglia, our CEO; Michael Bercovich, our CFO; and Harmeet Singh, our Chief Technology Officer. Let's begin with Mike Battaglia. And I think most of you on the call know Mike. He stepped into the CEO role in February of this year. Prior to that, Mike was our COO. And prior to Blink, Mike spent over 20 years in the automotive industry, including the data intelligence industry of the automotive sector. So with that, let's start.

Mike, I guess the first question goes to you. What's keeping you up at night these days?

I'll start off with the zinger. What's interesting about that question, Vitalie, is when someone asks it, it's usually the response is something negative. So you say, what keeps me up at night is this, this and this, it's usually negative. And in this instance, I'll answer it this way, is that what keeps me up at night is thinking about all of the progress we've made at Blink and yet how much we still have to go. But the progress we've made is significant. And I think in the middle of the night, you wake up and you think about all the things that are still left undone that you want to do, knowing where this company needs to go in terms of getting into profitability and where we as a management team and an organization want it to go, and I think where investors want to see it go. So -- but more than keeping awake at night for over some ruminating thought, it's important to talk about what we've accomplished and where the challenges still lie because there are most definitely still challenges, and we all know that. But looking at what we've accomplished. When we had the first quarter earnings announcement, we knew that was not a great performance, and it frustrated all of us as to where we landed. But we said during that call that the second quarter was going to be better than the first quarter, and we delivered on that and to the tune of 38% sequential revenue growth, and there's other things in there that are significant. We had a 22% reduction in compensation expense. We took out $8 million worth of operating expenses on an annualized basis just in that quarter. So that's just one element of it. And on the challenging side, look, we still have to preserve liquidity. We have to manage our cash very carefully. And thankfully, I'm sitting next to someone who I think you'll talk about in a moment, who's doing a very, very good job at that and who I'm happy to have next to me. So look, we've accomplished a lot in a short period of time over the last 6 months, but we still have a long way to go.

Great. Thank you. And just to remind everyone, you can submit questions through the Fireside chat interface. Thank you to those who sent the questions in advance. We've incorporated them into these discussions, but please feel free to send more questions our way. Let's move to Michael Bercovich. Michael Bercovich, welcome to the company. Most of you who don't know Michael, he spent a big portion of his career in the public company domain, but also the last 10 years or so, he's spent more entrepreneurial, I would say, more transformational type of companies, and he's joined Blink in June of this year. So with that, welcome, Michael. And you've been here for a couple of months now. Curious what you've seen at Blink, what have you experienced? And what do you think the opportunities are within the finance department, but also overall within the company?

Yes, sure. Thank you, Vitalie. Thank you for a warm welcome. I did spend half of my career in publicly traded companies where I started with the transformation initiatives, was really part of one initiative that transformed company from loss to profit. And then I went to more entrepreneurial organizations, as you said, start-up and also worked on either hyper growth or companies that had to go and transform to positive cash flow. So I'm really, really excited being in Blink. I see tremendous potential. In the last couple of months I've been here, I've witnessed and evidenced strengths, challenges and also huge potential. And I have seen team dedication and the resilience of operation. And those are really, really important things when the company is going through transformation as we do. From an opportunities perspective, I saw signs of momentum with improvements in business trajectory, operational discipline as we talked through our Q2 earnings release, team collaboration all across, which is super important, especially in times like that and more close to my heart working capital practices that we instill across the board. There is significant opportunity to build on those early wins and drive forward. And that's my kind of a recollection of the last couple of months and what I've seen.

Great. Great. And I know Mike mentioned the $8 million that we announced on the previous earnings call on an annualized basis that we've reduced from operating expenses. I know you touched upon a little bit, but is there an opportunity to do more of that, something to reduce maybe operating expenses, potentially even cash flow?

Yes. I'll tell you, I'm not going to give guidance here, but I'll tell you where I'm focusing on, right? So we identified several areas of operational improvements and that's where we're focusing on right now. First of all is AR collections. Collections performance has improved, and that's the most important thing. There's more focus on follow-ups and better tracking of the receivables and our commercial management in general. Inventory management. As we already talked about in our Q2 earnings, we addressed the slow-moving and obsolete items. And those are very, very key when you do inventory management. The third piece will be cash optimization, expense control, operational discipline. Those are really, really important as we move forward, and we continue taking out expenses from our operating expenses and aligning our revenue to our costs. Cross-functional collaboration. You can't do that without a team that is completely mobilized for that effort. And teams are working together to drive operational excellence from sales to finance to HR to technology, everyone is one Blink, and that's super, super important. The last piece where I'm focusing on right now is systems consolidation. But there is a clear opportunity to consolidate different systems into one integrated platform and drive additional efficiencies as we move forward.

Great. Well, thanks for that. Let's move on to Harmeet Singh, our Chief Technology Officer. Harmeet started with us in July. Just very recently, Harmeet has had quite a career in the charging space. He's worked for Greenlots, Shell Recharge. He was one of the leaders of those companies. He also founded and was the CEO of Zemetric, the company that Blink acquired. And now Harmeet is our Chief Technology Officer. So Harmeet, welcome to the company. And if you could spend a little bit telling us about your first couple -- first month or so at Blink and what opportunities do you see going forward?

Yes, absolutely. Vitalie, thank you for the introduction. One of the things that really excites me about Blink is its reach. We have one of the largest networks enabled on a global technology platform. But our number one goal is to make EV charging a completely frictionless experience for EV drivers. And honestly, I think we have some work to do in that area. So therefore, we are aligning our teams and our technology roadmap for a seamless customer experience and customer excellence. While we may have addressed EV range anxiety, but we have gone from range anxiety to charger anxiety. And we need to make sure that we are maintaining the highest uptime on our network and that every charging session is successful at its first attempt. So I'd like for us to be relentlessly customer-obsessed and technology really needs to drive that experience. Now in addition to solving these -- some fundamental issues, I'm very excited about a couple of other areas. For example, intersection of EVs with electrical grid, right? This creates an opportunity for us to enable EVs as a grid asset and unlock stacked value streams, both for Blink but also for our customers and our partners. We are also working on enabling newer payment technologies on this platform. I'd also like to add that we have identified areas of tremendous efficiency already in technology organization and operations in a very short amount of time that I have been here. Listen, opportunities here are endless, but I will just round it out by reemphasizing that a frictionless and a delightful user experience and maximizing operational efficiency are at the top of my list in terms of goals.

Thanks, Harmeet. And Harmeet, we published a press release today. We talked a little bit about crypto -- accepting crypto payments. Can you talk to us a little bit more about this? And what type of opportunities do you see through crypto or blockchain here at Blink?

Yes. I believe that crypto presents a very interesting opportunity in the EV space, right, ranging from being able to instant settlements, transparency and lowering transaction costs, especially for where we have micro payments in the EV charging space. And while allowing for additional payment options for EV drivers, cryptocurrency has the potential to also streamline payment operations and interoperability and lower the cost for CPOs inside host. Blink will be integrating cryptocurrency payment options across our network by the end of 2025. We will be sharing further updates, Vitalie, as we continue to refine our road map and execute on it.

Okay. Good. Good. Okay. So now we'll address a couple of questions that came through our mailbox and also through the chat.

Vitalie, just one comment, just real briefly. So we started this transformation at Blink really towards the beginning of the year. But one thing I want the audience to understand is that Michael Bercovich, Harmeet Singh are transformational leaders. And we got to a point and they've come in and they're accelerating the pace of that. And it's super important. And for all of the rest of the organization that has been at Blink, they're rallying behind these guys. So just as a quick aside, I couldn't be more happier -- I couldn't be more happy to have them on my side. They're an asset, not just to me personally but really to the organization. And we're going to do some very interesting things going forward. And I think what Harmeet touched on is really important because I talk a lot about cost reduction and certainly Michael does and working capital optimization. We talk about top line revenue growth. But what cannot get lost in that conversation is innovation and bringing new things to the market that are exciting and that customers are looking for and that customers don't even realize they need yet. And we have to do all of it. We can't just do a piece of it. We have to keep our expenses low. We have to preserve liquidity. We have to grow the top line. But just as importantly is we have to be an innovative company. At the end of the day, we're a technology organization, and we have to live like one.

Thank you. Makes sense. Mike, I guess this next question could go to either one of you, but an investor is asking when do we expect Blink to achieve profitability?

Yes. Great question. So maybe I'll start.

Please go ahead.

Okay. So profitability is the overarching tenet of the Blink Forward initiative that we launched back in February. So we are relentlessly focused on getting this company to profitability and to cash flow positive. That is absolutely the goal. A lot of good things come from achieving those things. So what we talked about on the last couple of earnings calls is that we were not going to provide guidance on when we're going to achieve EBITDA profitability. Why? Because we are trying to establish a culture at Blink that when we say something or we announce something that we're going to deliver on it and that we have an extremely high level of confidence that we're going to do what we say we did. So while we're getting better clarity on it, we're still not prepared to come out and give a definitive date because when we are confident, we want our audience members, our investors, our supplier community, stakeholders to be equally as confident. So while we feel like we're on the right trajectory, we're not there yet. We have more work to do. But I think, again, I'm going to say it, we have a plan, the plan is working, and we're going to stick to the plan.

Yes. And I want to add, profitability is a mindset, right? Every right business, the mindset is being profitable. And that's what we're instilling right now. I don't believe -- and I came out of a different industry, I don't believe there were any EV company that was profitable. And I don't know if we're going to be the first, right? Because we're not providing guidance, but I can tell you that we're working on the mindset because the mindset will drive us there, aligning revenue with cost, doing the right decision on capital allocation. It's not essentially cost cutting. It's a capital allocation, where do we want to invest, how we want to go and see strategic plan evolve in the future. It's a part of that mindset of profitability that Mike talks about.

Great. Thank you. Next question is about the Blink-owned portfolio of chargers. I don't know, Mike, if you want to talk a little bit about sort of where are we moving as a company? Are we moving more towards Blink owned, towards product? How do you see that?

Yes. So first of all, I'm going to reiterate what Blink is good at and Blink's strengths. And one of Blink's strengths that we bring to the market is the fact that we have flexibility. And what does that mean? It means we go to market two ways. We sell charging stations and associated services to clients that want to buy them, and we also own and operate charging stations. The owner-operator side of the business is unquestionably the future of Blink. It is where we want to go. It's where our most aggressive revenue growth has been over time. It's still not a significant enough portion of our overall revenue, but we're getting there each quarter. And I think, again, our charging services revenue in the second quarter was up 46% year-over-year. And we continue to see numbers like that in quarters past. So the challenge is that it requires a lot of capital in order to get there. So right now, what we're doing is we are preserving capital. We are making sure that, as Michael mentioned, the capital allocation is responsible. So when we invest in a Blink-owned site, it is only the very best site that is in front of us at a particular point in time. So the future of the company and where the value is built is in Blink-owned, and we're going to continue to focus on that. But at the same time, we're also very bullish about the equipment sales portion of the business right now as it sits. So again, we think the second half of the year from a revenue perspective is going to be better than the first half as we said in the past.

Okay. And actually, a question came in that I think ties very well into this previous one. Utilization. What type of numbers is Blink seeing? And maybe you want to differentiate between L2 versus DC and maybe some of the stories around that.

Yes, yes. Great. So first of all, overall utilization is increasing. Now there's two ways to measure utilization. There's what's called time-based and there's energy-based. And one of the things the industry needs to do is get a standardized definition of that, okay? But overall, we're seeing increased utilization across our Blink network for charging stations. The number of gigawatt hours that have gone through the Blink networks have increased dramatically, right, over time. So that is one measure of utilization. It's just the amount of energy that's going through the network. Where we see a lot of bright spots are in our DC fast charging portfolio. And we're seeing the utilization of some of our sites within the DC fast charging portfolio, 20%, 30%, 40% utilization. Now that's not portfolio-wide, but what it does is it gives you a glimpse of when you pick the right site, you invest in the right areas, what you can achieve. And so when we look at charging stations that we've installed more recently, the utilization is far better than, let's say, charging stations that the company installed 10 years ago. So there's a very disciplined approach to this, and we're seeing very, very nice gains in utilization.

Great. And actually, another question came in that ties well into what we're going to talk about next. The question is, when will we introduce the next version of the L2 charger in the U.S. or Europe. And I think it's a perfect time to talk about Zemetric because it also came up on the second quarter earnings call a few times. So maybe Mike or Harmeet, if you can talk a little bit about the Zemetric acquisition. What does it bring to Blink in terms of product, software? And obviously, we've got Harmeet as our CTO, please go ahead.

Yes, I'll start quickly because on the second quarter call, there was actually a lot of questions about it more than I think we were even expecting. But let me -- I'll kind of tell the story of how the Zemetric acquisition came about. So as I was searching for a CTO and a really transformational CTO who was very aligned with where I wanted to go, interviewed several people obviously and stumbled across Harmeet and immediately knew that this was the right guy for Blink. Now the complication to it was that he happened to own an EV charging company. So it's like, well, what do you do with that, right? So the first thing we did, obviously, was evaluate the company, we peeled back the onion. And what we saw we liked very much. And what the fit was is that what we had talked about previously is that we had a gap in our product line for like a value optimized sort of fleet multifamily charger that was really tailored to that segment. And we were developing one on our own. And when we looked at Zemetric, they already had that product line plus a lot of other interesting technologies and a very small team that was very talented. So when we looked at this entire thing, it was opportunistic, but in many ways, it was a no-brainer, and it was a very, very good decision. So that's a perspective on how the acquisition came about but Harmeet can certainly elaborate.

Yes, Harmeet, if you'd like to add some more, maybe tell us how the idea came up about Zemetric and what you're focused on that would be helpful.

Yes, absolutely. We started Zemetric with the goal of performance and reliability. And we took a fleet-first approach because to us that was one of the most interesting use cases in the EV charging space, right? So Zemetric's Shasta hardware product line and our Denali software platform aligned perfectly with Blink and sort of acted as a road map accelerator and filled critical portfolio gaps for Blink, as you guys just talked about, right? So our solutions that range from lowering the total cost of ownership for fleets by optimizing their charging curves and to our Level 2 chargers that are built for high performance, high reliability, maximum uptime with features such as cable tampering alerts, they fit very nicely with Blink's product portfolio. But as Mike also mentioned, most importantly, the acquisition and this merger also adds great talent from -- and leadership from Zemetric to an extremely talented team at Blink. And we are very excited for the future and for doing some great things together here.

Great. Next question is actually about software. So it goes back to Harmeet. Harmeet, the question is, is there an opportunity to streamline and commonize the software on the networks but also on the chargers, so firmware-wise, if you could talk about that.

Yes, yes, absolutely. There are tremendous synergies. And I'd like to echo what Mike had mentioned, the teams have rallied behind these synergies from both sides and at lightning speed, I'm surprised, right? So we have already started on sort of that next generation of hardware platform that brings the best of both the worlds. And we'll be sharing the -- some of the dates around that plan pretty soon when will it be launched. But it's happening faster than I actually thought that it would. And same goes on the software platform side. And I'd like to make a comment, right? We typically tend to talk about products as a hardware product or a software product. But we're taking a different approach now. We're taking a solution-based approach. We're not thinking and talking about hardware in isolation from software. And the best thing is what we are going to offer and what we offer is an integrated value proposition that includes software, hardware and services but everything built on open standards. So they -- so our customers get best of both the worlds. They get an integrated solution, integrated value proposition, but they also have the comfort and confidence that they're not locked into any proprietary technology. So that's very important.

Great. Great. Next question that just came in is about the NACS connectors, the NACS connectors. How many of those does Blink have? And how fast are we going to deploy those out into the field?

Yes. So I'll start there, maybe, Harmeet, and feel free to comment. So the beautiful thing about our hardware platforms is that the charger chassis itself is agnostic. So we can attach a J1772 cable to it or we can attach an NACS cable to it. So that, by the way, is customer-driven. We're not necessarily driving that. We are reacting to what our customers want to see out in the field. So we have deployed some NACS cables. I think we'll see more and more of them, especially on Blink-owned chargers out in the field. But it's still really early in terms of NACS deployment. But again, we've seen some demand from customers, but we expect that to go up quite a bit.

Okay. Great. Harmeet, would you like to add anything to this?

No, I'd just like to emphasize that our solutions and our products are agnostic to whether it's NACS or a different standard. And we can actually also do those replacements in the field. So we're making sure that, that's part of our sort of design fabric.

Great. Okay. And the next question sort of ties to this one. In Europe, they don't have NACS. It's all one standard, but what type of utilization and trends are we seeing in Europe right now?

Yes. So I mean, overall in Europe, I think it's fairly common knowledge that EV adoption in Europe has outpaced the United States. So within our -- certainly our overall software networks in Europe but also especially our Blink-owned network, we continue to see improvements in utilization. And look, there's a lot more cars being deployed and sold into the market than there are charging stations being built, right, at least from Blink. So we're seeing more and more cars obviously visit our charging stations. But again, we're happy with the growth trajectory of our charging services revenue, both from an overall company perspective as well as from in isolation European charging perspective.

Okay. Great. Great. Okay. So we just went through the questions that came in. But before we conclude, I would like to maybe give an opportunity to each one of you to kind of summarize what -- and maybe tell investors what they should look out for in the future, right? So maybe we'll start with Harmeet. Harmeet, if you want to provide a couple of words before we conclude here.

Absolutely. I think to echo what Mike had earlier mentioned, extreme focus on innovation making sure that we are listening to our customers, customer experience and customer excellence. And also very importantly, we're very -- we're aligning very fast internally across ops, product and tech to really position our technology and products across customer segments. So we have a very clear value proposition for each of the customer segments that we serve, and we maximize the value, both for us and then also for our customers there.

Great. Thank you. Michael Bercovich?

The next few quarters will be about translating early moves into lasting structural improvements and setting the foundation for long-term success. I think we made progress in revenue and operational metrics and the biggest opportunities lie now in tightening working capital efficiency, driving operational discipline and investing in scalable systems and cross-functional collaboration. I think by doing so we can build a more resilient and agile organization positioned for sustainable growth. And this is where the focus will be.

Great. Thank you. And then Mike, please.

Yes. So I think I want to emphasize a couple of points. Number one, as I mentioned before, we're doing everything we can to establish this culture of when we say we're going to do something, we're going to do it and we're going to deliver it. So we're going to continue to build on that. Secondly, if I'm an investor and I have already invested in Blink or I'm thinking about investing in Blink, I think I want as much transparency as possible from the company that I'm putting my hard-earned money into. And we are going to strive to be as transparent as we possibly can. And it's forms like this that we're using to try to do that. So the message is, we're making a lot of progress. I think the second quarter was evident of some of the progress that we've made. We have more to go. And -- but any company has more to go, right? It's -- you never reach the end goal. You're constantly moving in a direction and you constantly set new goals and objectives and things like that. But I like personally where we're headed. I think the organization and the employee base is rallying behind where we're headed. So I think we've done a lot. We have clear direction on where we want to go. We have more to do.

And with this, we're going to conclude. We would like to thank all of you online and all of you who have submitted questions. The goal is to keep the communications lines open. So please feel free to e-mail us at [email protected]. We'll make sure to collect your questions and then set up meetings with our management team. So with this, I want to thank Mike, Michael, and Harmeet, and we'll stay in touch. Thanks again.

Thank you.

Thank you.