ChargePoint Holdings, Inc. (CHPT) Earnings Call Transcript & Summary

Okay. Great. We're at time. So let's go ahead and get started. My name is Mark Delaney, and I cover ChargePoint for Goldman Sachs. Very pleased to have with us today, Pasquale Romano, the President and CEO of ChargePoint. Thanks for joining us.

Yes. Thank you. Thank you.

Well, I mean, really exciting times in the industry and lots of stuff I've been looking forward to being able to catch up with you about today. And I know investors have been looking forward to digging into the business a bit more. Maybe start with a couple of questions, if we could, on the broader market opportunity because I think the company has been seeing pretty good demand trends across some of the different verticals and maybe you can give us a quick update what you've been seeing in terms of the various segments, be it commercial, fleet or residential.

So it's -- I think broadly, it's one of the most instinctively counterintuitive industries that I've ever seen related to how long this can grow this way. I just don't think most people that have been in business are used to something that could grow at outsized rates for decades, but it is that big. So this doesn't saturate because charger growth grows in most segments in proportional to vehicles that are sold. And this is a 20- to 25-year trend to change out the number of vehicles in North America and Europe. With respect to the segment growth, we're very pleased that the segments, in general, commercial, vertical and residential are growing. They're all growing. So we're not seeing any hotspots or cold spots relative to expectations. I think that's pretty natural in that cars find themselves because they're mobile in different use cases, right? They see themselves at home charging or multifamily, they see themselves at work. They have opportunities to charge in a lot of different environments. So it really drives a broad -- really broad adoption curve. We're really happy that we're actually able to be competitive in all those verticals. But I think that's because of the investment that we've made. We have the OpEx to show for it. So...

Love to talk on the Inflation Reduction Act, right, another big industry topic and recently was passed. How do you think it could change the charging market?

Not much in the short term. So I think all of these things -- I think people that cover our vertical probably have a bit of PTSD from solar. So there seems to be a bit of sensitivity, too. Is this going to change the game versus build? None of it is built into our forecast. None of it's built into our business model. And I'll be very specific on Investment Reduction Act. If supply exceeds demand by a large margin, especially in fleet, but passenger car as well, what short-term subsidies tend to accrete to is higher vehicle margins on the OEM side. And so -- and that's because if you're selling all the widgets you can make and someone drives a credit in, you just swallow the credit because the competitive landscape hasn't taken effect yet because supply and demand aren't in alignment. When supply and demand come in alignment, then that changes, right? And then you have to actually compete. So we're a ways off from that. Now I think it's good policy because you've got an opportunity before the midterms to get something like this through, and it's going to be in existence for multiple years. So maybe later, right, things have effect. With respect to our industry in general, vehicles drive the need for charging and drive utilization pressure. We've said very consistently that our revenue is bolted pretty much either in our ability to take share where we hadn't had any. So you see us come -- the Europe phenomena for us is there. Fleet is a new segment. So we're seeing that. All right. And if you look at the penetration of chargers relative to, say, a tax credit in the IRA, the tax credit has an effect when it's going to expire in pulling business forward. But if you don't need a charger right now or you're buying all the chargers that you need relative to the vehicle, you're not going to pull forward charger installation until you're up against the next expiry wall, and you're not going to be up against the next expiry wall for a while. And you still have to write a check for the charger. It's not like they're giving you a free charger. It's effectively a built-in discount on the chargers. So I'm -- it's upside to us. It's nice to have. It's good to have in the ecosystem, but we're not sitting here saying, "Oh, my God, thank God for IRA or we'd be dead," because we don't build it into our model.

Okay. That's really interesting. And you also work on the National Infrastructure Advisory Council. And anything you can share from your role there about what can be accomplished in terms of building out charging infrastructure in the U.S.?

I just had exactly one introductory meeting, and first meeting's coming up in D.C., where we'll get together as a full group. That role is largely independent of my -- I'm not there to lobby for more subsidies for charging. I'm there as a concerned person for the stability and the security of our long-term infrastructure, even beyond charging, power, water, everything. That's really a very separate thing for me personally. It's not really a ChargePoint thing.

Okay. I wanted to get your thoughts on the grid and the ability to support the build-out of the charging. And we're in California, so it's pretty topical just last week, right, with the record heat and the grid was extremely stressed. And so as you think about more EVs going into the fleet and the demands for charging, what are your thoughts around the ability for the grid to support that? And to continue -- at the current pace of investment in the grid, is that going to be sufficient? Or do you need a dramatic increase in grid investment in order to enable this transition to EVs?

Yes. So first of all, I don't think a lot of our situation in California, in particular, is driven to -- is driven by distribution capacity. A lot of it's driven by available, in the moment, energy to support the energy loads. So you may have hotspots in the distribution. Charge -- so I'll give you some factoids that'll help inform kind of how to, I think, think about EV impact on overall energy consumption, which speaks about generation and distribution capacity. Cars are used 4% of the time, which means we've got plenty of time to onboard fuel while they're parked. So if you park occasionally at home, occasionally at work, occasionally around town, statistically in the -- the cloud of vehicles out there, when they get to a large level, if the chargers are kind of metering based on signaling from either the grid operator or the local utility, which we already have programs with a bunch of utilities that do exactly that, you can actually use them to your advantage because you can basically take your lowest of lows and bring it up and you can take your highest of highs and bring it down a little bit because you can control the influx of energy into the vehicle. So technically speaking, it should actually be a benefit. And if you look at the total number of kilowatt hours, consider 4 terawatt hours or so in the United States and you look at the total vehicle consumption even with pessimistic efficiency gains in electric vehicles from light weighting and all that sort of stuff, it's about another 1,000 terawatt hours. And so at that point, it's only 25% more load, but then you've got energy conservation and the population is not growing so -- that fast. So what you've got is the baseload consumed by buildings and everything else is dropping, right? And you're adding more cars. So the question is does one really outrun the other. It doesn't need that much more generation, and it doesn't need that much more distribution capacity. You'll have hotspots because fleets and other things are charging in areas that didn't have demand before, so you'll need to reorganize a little bit on the distribution side. But it's a slow-moving variable. So it's much to do about nothing. I mean I just look at all -- the grid is going to fall over. If the grid is going to fall over, it needs an upgrade for sure, but it's going to fall over for a whole lot of other reasons. It isn't going to fall over because of electric cars.

That's very interesting. Maybe talk a little bit more on ChargePoint specifically. The company's had a couple of partnerships that you started, Starbucks and Volvo. I love to know a little bit more around how you came to begin with these partnerships and what your view is of them going forward.

Well, Volvo's an interesting one. We've got partnerships with a lot of auto OEMs. Volvo was the first production Google car, where it ran Android as the native environment in the vehicle. So it's not Android from your mobile phone. It's not an Android auto application. Our application is running native in that system, and we work with Google to kind of sort out exactly how it was all going to work with the nav system and things like that, kind of 3-way with us and Google and Volvo. So we like the partnership because it was a way to push the technology envelope forward and more coming. I think the original -- this first incarnation of Google cars got its pluses and got its minuses like the first incarnation of anything, but it will evolve pretty fast. So that's how it started. We got -- our message to most auto OEMs in the retail and convenience sector for long-haul driving is you need to reinvent the road trip and don't use the existing models for either gasoline or early EV charging for road trips as a good model because they all are horrible. In the EV charging side, they're super horrible from a long-haul driving perspective because what do you want as a long-haul driver. I'm stopping. My kids are screaming in the back. Do you want to get some fast food? Do you need a coffee to stay awake? If you're -- if it's late at night, do you want to stop someplace in the back 40 of a Kohl's parking lot that isn't operating with no lights, no security camera, right? And so think of it -- no bathroom. So think about what you want. What you want is you want something that, hey, maybe I can buy a bottle of water, maybe I can get a coffee, maybe I can use the Wi-Fi, maybe I can use the bathroom. And by the way, I feel safe, right, because it's lit and it's monitored. And if it's unattended, it's at least monitored with security cameras. The Internet can solve all these problems. So if you reinvent the road trip, what you want is you want the nav system in the vehicle or the auto OEM's mobile app or our mobile app to tell you where to stop or to give you choices. So imagine you say I'm going to L.A. from San Francisco, say you're on a road trip. And it's, as you know, based on your battery range, weather conditions, driving patterns, you're going to need to stop somewhere in this range. Do you want an In-N-Out burger, a Starbucks, a 7-Eleven? Where do you want to stop? So flip it from do you want to stop and charge here to what do you want to do because you're going to be sitting there for 20 minutes, right? So what do you want to do for your 20 minutes? And that's, I think, the real opportunity to make the road trip experience better. And then you can start to think, okay, can I preorder? Can it come out to my car right when I'm there? When I'm 15 minutes away, can it reserve me the stall? So if -- so I don't wind up there having to wait, right, because unexpectedly. If I'm a premium driver, let's say I'm a Volvo higher-end driver, I bought a higher-end package, do I get the ability to reserve that stall, so no one can take it from me, but I can't -- there's 1 million different consumer options. And that's where we're very tech DNA company. We're not an industrial DNA company, so that's how we think about everything that we do, is always from a software perspective and what we can bring the OEMs and Volvo got pretty enamored with that as they should have. And I think Starbucks is leaning into the front end of the energy transition.

I definitely empathize with the kids screaming in the back of the car and needing a good place to stop. So that's pretty attractive from my perspective. No, that's great and really exciting and interesting things you can do with charging and the move to a connected car, so lots of exciting stuff there. One of the interesting things about your business is you've got a full set of solutions, and I think that's one of the things that may be helping you to get some of these partnerships, right? You do DC. You do Level 2. You do all the services. Maybe you talk about how you go about packaging those together. I think it's a pretty important part of your value proposition.

Yes. I mean I think -- so every company needs a couple of kind of very simple ways to communicate to the market and more importantly, your employees, so they kind of have a framework to think about it. One of our internal sayings is never make the customer the integrator, okay? And the reason is charging is something that is not -- that is typically -- and this is a good thing. It's not going to sound like a good thing when this comes out of my mouth. It's peripheral to the business, okay? We're okay with that. If we do our jobs well, the business doesn't have to think about the charging in the parking lot. They can when they want to change the policy or decide if they want to integrate it with a rewards program or make it available, some preorder for some amenity on our mobile app or in-dash system that we're connecting. That's all great. But on a day-to-day basis, they shouldn't have to support it. They shouldn't have to think about it. They shouldn't have to arbitrate between a multitude of vendors to figure out how to get something fixed or any of that stuff has just got to work. It's got to kind of be like when you rent 20,000 square feet of office space, you expect the trees to be trimmed, the parking lot to be clean, right, all that sort of stuff. I mean those things, you expect. And they should just -- it should just become part of the backdrop. Just it's bulletproof. It's reliable. It's there. Someone else takes care of it, and you don't have to think about it. And by the way, most importantly, your person at the reception desk or your person, your retail clerk or what have you doesn't have to proxy as support because your customers walk in from the parking or your employees walk in. If there's an issue or a question, you suddenly now have a support burden on something you just don't want to support. It would be like if your badge reader on the door of where -- of your office worked intermittently or you had some confusion, maybe they didn't hand you a badge when you joined the company, but they said, "Well, you have to download a mobile app and go through this registration process." Well, right there, you got questions, right? Some number of people are going to need a mental hug to go through that process. We are the ones who take care of that. And I think that's the big value proposition, is you can't piece this out because it's not the primary reason that business exists.

And I think you only sell the hardware with a subscription attached to it. And I believe 3 years is a typical subscription length.

No, no. I mean the subscription on the cloud, the subscription -- the number of years that people buy in advance is really kind of up to them as to how much price lock-in effectively they want to have because they can buy some number of years upfront, and they get that price and they're protected against any price increase or what have you because they've already paid for the license. There isn't any natural correlation between that and churn or anything like that if that's what you're getting at. Those customers tend to stay customers over a long period of time. And their choice as to whether they want to engage with us for a year or 3 years upfront may have something to do with how many months or years they have left on their lease, right? Or how we're managing cash that year or what have you.

Yes. No, that's right where I was going. So as you are seeing some of these subscription terms come to an end, what kind of rebuy rates and re-sign up rates are you seeing with the current installed base?

I mean it's -- churn's in low single digits. It's not a big number. And it -- the rebuy rate comment, when you hear us comment on it, has more to do with the expansion because of utilization pressure in the scenario that the customer parking lot is in. So if it's a retailer and twice as many EVs start showing up because more people buy EVs in the customer serving area of that retailer, they're going to see their utilization levels rise until they have to buy more. And so we see about, any given quarter, 60% to 70% of our business. It's been very consistent. It just seems to be a number that's kind of falling out. 60% to 70% of the business is rebuys. And that's not a transaction count. That's a dollar count.

No, that's very helpful. Tesla has said they plan to open up the U.S. charging network. What do you think that means for ChargePoint?

Not a whole lot. But first of all, we don't -- we think the retail and convenience sector is going to embrace this because they have to because it's got to transform into -- as a higher and higher percentage of EVs are out there, it's got to transform more to the modality of people being there for 20 minutes and serving them things that are higher margin than energy. Frankly, I applaud Tesla. They're a very large percentage of EVs on the road in North America. And if it weren't for them, we have no utilization on our network whatsoever, which means that there would be no rebuy rate. So you've got to applaud a company that's going out there all in on electric vehicles, proven to the world that it's possible and literally accelerating every other auto OEM to go faster, which is, I think, a wonderful thing. It's really causing the right behaviors. So if they open it up, it's still prerogative.

Maybe just a little bit more on some of the geographic pieces of your business. I think 80%, 85% of the revenue comes from North America, but you've been expanding into Europe and seeing some good growth there. How is the strategy similar or different between the 2 regions?

I think the overall strategy is the same. I think the path to market can be a little different by vertical. So I'll just give you a couple of examples. It's like it's a complicated number of vehicles that we're in, but if you take access to workplace charging, which is -- and the only reason I highlight that one is outside of -- even post pandemic outside of home, it's where your cars parked the most predictably, right? And so you're either at home or work and even if you're at work 2 or 3 days a week, it's still a much higher percentage than it being parked at a retailer around town parking lot. So if you take that, a large percentage of vehicles -- electric vehicles are going to consumers as part of their compensation in Europe because it's tax effective. So that's a natural thing. It's an expected part of certain categories of jobs compensation. And it's a large percentage of vehicles. I believe it's about 20% of all vehicles. Don't quote me on that number, but I believe that's around the order of magnitude and much higher from an EV perspective given kind of where the price points are in the market right now for EVs and how that correlates to that demographic that gets it as part of their job. So that doesn't exist in the U.S. So it says that you should focus on partnering with a lot of those leasing companies. That gets us 2 things. It gets us obviously a software integration with a leasing company so that they can do home reimbursement, so the home charger can come along with the vehicle, arrange for installation and then the electricity associated with the vehicle when dispensed at home can be auto reimbursed to the employees. So that's something that the -- all the leasing companies want to provide. Consolidated reimbursement for just general charging in the wild because a fuel card typically comes along with that vehicle that you get with your compensation, too. So think of electric -- think of us as kind of enabling a new age fuel card in that respect or a new age reimbursement service through the lease co. And then you've got the workplace charging side of things, which that enables as well. So you don't have that dynamic in the U.S. at all. So it's a very different path to workplace. If you look at the electricity markets in Europe, it's fully deregulated, where it's not fully regulated, except for maybe Texas and parts of the East Coast in the United States. So on electricity retailer, there can be channel and they can bundle it with things where, here, an IOU has a harder time given the regulatory constraints on what they can do. So you've got different ways to market. Does the fundamental technology, software, all that stuff differ? Not really.

Maybe talk about another monetization channel, potentially advertising. I think you spoke a little bit about that on your most recent earnings call, but remind us what ChargePoint does today and how advertising potentially support the charging infrastructure or profitability over time?

So I think look, the -- if you look at what we've done philosophically, it's been an -- and a concatenation model of different ways of engaging with charging. So you saw us initially focus purely on you buy the CapEx, you pay us a subscription. Then we had the bundled model where we can -- we still have this, where you can get the hardware bundled in with the subscription, so it's essentially subscription hardware and software, but you have to do the installation. And you saw the partnership with now M&A as they spun out of Goldman Sachs. And there's -- that enables a whole bunch of different financing options that are more creative that include financing the installation or even potentially owning and operating the charger but allowing the brand or the business to be on it. So we keep adding engagement models fast forward to tape. Now ad-supported, is that going to change the game? No, for retailers or for public areas where you would have add value? It's nice to work with a partner that can bring that to market, and the way we've done it with a partner, think about them as a specialized channel, right? Is the charging in the ad or the ad billboard are separated? And the reason is even the direction of the things, where they face, can change the impression value or the ratio of how many chargers a single-ad installation can support may change. So it's flexibly bundle-able there. And as the retailer, the parking -- public parking operator, what have you expand, eventually, you can't cover the incremental chargers because the impression value doesn't cover everything because you can't just put an infinite number of billboards in an infinitely small number of area -- amount of area. The impression value will just go down. So with us, it's a smooth slider. They can start out with a little bit of ad support. They can add incrementally where it doesn't pencil with us. It's the same management system. It's the same ability to administer it, et cetera. So it's a much smoother continuum. And they can even mix in some of the other ways that we do business into their portfolio. So for us, it's all about making ourselves easy to buy from.

One thing that has not been easy for some time is supply chain. So maybe we can talk a little bit more on that. It's been frustrating for so many companies across lots of industries. Are you seeing any signs of improvement? And when do you think perhaps this could be resolved if you took your crystal ball out?

So I think I will permanently have PTSD for the rest of my life on this one issue, and I'm not alone. I've never seen it before. I've been making some element of hardware and software for my entire career over 30 years. I've never seen it this bad for this long. It's getting better in that when it started, it was -- you couldn't count on anything, plastic, metal, cables, garden variety, electrical components that you would think would never be in short supply, logistics, stuff that was stuck in a port, COVID shutdowns in factories suddenly, so the stuff sitting there on a shelf but there's no one that can go in the front door legally to basically pull it off the shelf and stick it on a boat or a plane to get to you. So like it started out just like it was completely random. Now it's narrowed to where it's mostly ICs. It's mostly chips, mostly. You still get hit with the random here and there. As my head of supply chain tells me all the time, whether it's 20 parts or 2 parts, until you get to 0 parts on the short list, you can't build. So you may see the gross margin improvement, which we forecasted as things lighten up. But as long as you're constrained by any one component, you could get hit with a shortage that means you can't supply. Now you could clear that usually much easier, so you're going to see things ease up. We can't predict exactly when that's going to happen because, I mean, I just think it's suicidal to plan optimistically around that. But with that said, our growth rate has been pretty good. So even on the pessimistic side, we're running a perfectly fine business with a perfectly fine growth rate. So we've managed it this well so far. I thank our supply chain team and our employees literally every earnings call, and I mean it because I know what they're going through to be able to effectively double supply year-over-year. That's effectively what we're doing and try to manage gross margin improvement, logistics, scaling the business, et cetera. So hard to pull out a crystal ball. I got to believe that we've seen more of it behind us than in front of us, but to put a date on when it's going to go to 0. I don't know. And I think the macro could help us, by the way. The darker the storm clouds over consumer electronics, the more things can help. Although EVs are in -- EVs pull off some of the same IC shelves that we pull off of, not entirely, but some. So it's really hard to predict.

Anything you want to structure differently around operations or supply chain longer term? I mean you run higher levels of inventory, more dual sourcing, anything like that, that you think is more permanent change in your business?

I tell our supply chain team, I dare you to build inventory. I just dare you. Just to get to think. They're like no chance in the short term, right? I mean maybe things clear up for a particular product, and we can build a little bit of inventory here and there. We're at fairly low levels of finished goods inventory and continue to be. We'd like to get to an inventory position that's higher than we currently have. I don't think -- if the question has an element of what's that going to do to working capital, I don't think -- I'm not too worried about -- I'm not worried about that changing it's such an outsized way that it's going to dramatically affect the cash needs of the business. But aside from the growth rate always puts -- working capital requirements always go up as your business gets bigger. But I think our approach is to maintain a healthy level of inventory. We need -- there's always some mix ambiguity. So we have to have some safety stock outside of our mix forecast to be able to respond favorably to any natural just kind of mix dynamics that you run into quarter-over-quarter. And yes, the supply chain, when your business gets bigger, it has to get more and more sophisticated. So you've got to look at dual, triple, multi-sourcing, multi-region. You've got to remove single points of exposure to political climates, any kind of thing like that. So yes, that's what the team is working on.

Of course, one avenue companies can take when they're seeing all of these costs and supply chain complexity is trying to pass some of it on with higher pricing. You spoke about that on your earnings call. How much success are you having there? And what percentage of the way roughly do you think you are in terms of getting that agreed to with your customers? Is it 1/2, 2/3, just getting started? Just want to know about how the pricing is going.

So it's -- when you're -- when -- more than half of our business goes through channel, about 70% or so goes through channels. So when you have a channel-dominated business, you're never going to get 100% of your price increases because you just got contract terms and things like that. So it's like pushing a price increase through a Jell-O wall. But you do get it. We started -- we've made a couple of price increases this year. We expect it to manifest in the back half of the year. So I think we've got -- we mentioned that on our earnings call. So we'll get some of it. We have some percentage of the business, it's not high, on long-term contracts with price -- with pricing built in multiyear. I don't have all the contracts off the top of my head. I probably could throw some levers on exception -- just exceptional macro conditions. The question is most of the revenue for a lot of those very important customers are in front of us. And so the question is how much metal do you want to grind really on getting 100% of your price increases through relative -- forest for the trees relative to supply chain situations likely to clear up. You're going to get a reasonable percentage of the price increases filtering through over the back half of the year. You don't need to get 100% of it. So yes, it's going to have an effect. It should have an effect, a positive effect. It's got to offset some of the PPV and other variants.

Longer term, are there other adjacent markets, you think, ChargePoint could get into things like grid densification, battery storage, I mean things that kind of go around the charging installation?

Well, I mean, we already have entered energy management functionality. I don't think you'll see us in the hardware -- in the battery storage business hardware-wise. My personal feeling on that is the [ cell kit ]. Anything that's dominated to that degree by a single commodity and you don't make that commodity, that's a tough one. The thing I always make an analogy to is solid state disk drives. It's really hard to package someone else's flash chips when they package their own flash chips because that margin stack's really hard to compete with, right? And so I think the same thing goes here with battery cells. The cabinets are likely to be inverterless because you're largely going to move to a DC microgrid architecture, I think, from -- even in the home for most storage applications where it makes sense and it pencils. There's not a lot of content in the cabinet other than the battery cells, the sheet metal and any environmental management systems around that. So are we going to build that into our network of balance of system provider? Sure. Are we going to integrate with all that stuff? Sure. Someone going to make money on that? Sure. It probably isn't going to be us, okay? So battery storage, I would kind of not likely to do it. We could, right, but my current views are that could change, but don't see it.

I'm going to ask one more, and then I want to give the number of people we have here in the audience a chance to ask some of their questions. But when I think at the charging the industry level, one of the concerns a lot of consumers have is a lot of the stations don't work when they drive up to them. Reliability hasn't been great. And I'm not trying to speak to ChargePoint specifically, but that's been a criticism of kind of the charging networks that are out there. Maybe talk about what ChargePoint is doing to make sure you do have good uptime and reliability. And are there any kind of statistics you can share around how well your chargers are working [indiscernible]?

So I mean uptime's super important and especially if you're selling on maintenance and support package around your chargers because you're going to held to account by that. But the -- our view, and we're trying to internally think through how to improve things further, is that a charger that is not a private charger, meaning it's not a business solely for the employees or a narrow set of customers that have business, but the ones that are in kind of public parking scenarios, right, that are largely unattended and unmanned, really need some business model innovation even from us on how to take the next level of bulletproofness because this is critical infrastructure and it's super important. So we're always looking internally. We've got a large number of people thinking about this on how to innovate there and how to take it to an absurdly reliable level. We're also making a lot of business system investments on the entire customer life cycle. So we make sure that they use the tools we already have for network monitoring, uptime monitoring, utilization monitoring, all that stuff, to the next level. So we're looking at the entire customer journey and trying to constantly figure out how to up-level the engagement with the companies. Because remember, on one side of it, we want them not to have to think about it. On the other side of it, we want them to pay attention to it to make sure that they're engaged to a level that makes sure that there's enough of them, right? Things -- the pricing is set correctly. There's a lot more than just reliability, but you don't want to basically have an undereducated facilities person that doesn't really understand electricity and how that is consumed in an electric vehicle, set the wrong price or set the wrong parking model or maybe overstay fees and where that's applicable and where it's not. So there's a lot of factors beyond reliability that we're also trying to think about.

Let me see if anyone has the audience -- anyone in the audience has a question. Yes, we've got a mic coming over.

My question is really on standards. So I have a couple that, one, has a Tesla. The other has a Volvo EV. And I think that both of these are different in how the connectors are different. Are standards or the lack thereof an issue? Are there some vehicles that are not compatible with your charging stations?

No, all vehicles are compatible with the chargers. The Tesla example that you use, in particular, in the United States, Tesla has a connector unique to them. They ship an adapter with the vehicle, so we can use an AC charger and they've recently -- I don't know if it's publicly available in the United States on their website or not, but it's probably close. They've announced it. They have a CCS adapter for fast chargers to enable you to adapt the standard fast charger connector that all manufacturers besides Tesla use in the United States to a Tesla. So really, you don't have a compatibility issue in the U.S. or Europe for that matter.

Yes. Earlier, you talked about the growth being fairly consistent in the 3 segments. Can you talk about each one and sort of the puts and takes for growth?

Well, residential is moving as cars move from a less and less mix of plug-in hybrids into more BEVs across the board. And the dynamics are a little different in Europe than they are in the U.S. because the emission standards in Europe forced a lot more plug-in hybrid there. And that's going to sunset there, too. What you're seeing is you really need a home charger, an appropriate Level 2 home charger now if you've got a BEV because it's a big battery, right? And so people want that convenience. So I think the attach rate over time as things shift to 100% to BEVs goes up. Exactly what that will be is hard to say because some trade with access to public charging, workplace charging, et cetera, so there's some trade. You might have 2 EV households and do they have 2 chargers or share 1 because they don't plug in every day. There's lots of factors that affect the actual long-term attach rate, but we think that's a lot closer to 1:1 than not with respect to home charging. Multifamily is the one that I would -- I think in the long term is going to be great. It is already growing fast now because you got roughly 1/3 of the United States lives in apartments and condominiums housing where they're attached to their neighbor. And the parking is shared in those configurations. And so we've got some pretty interesting models that we have now and that we're evolving to make that easy for landlords. So I think that could be -- and that really needs a lot of software. So that's the beauty of that one, and that really lends itself well to subscription model. So we're pretty excited about that segment in the long term. Commercial, most mature, the outside the home commercial charging for passenger cars, that's the most mature segment. Mostly AC, probably 10% or so of the ports will be DC, plus or minus. DC is primarily going to be concentrated in places with valets, places that are road trip oriented where you're driving beyond your battery range. You'll get some metro area fill in there as well. And that's the most mature segment in both Europe and the U.S. So that's going to continue to click along at a ratio of likely, right, what do we see now in terms of TAM, 15 cars per -- 15 ports per 100 cars sold is the number we've used for modeling, could drip slowly up or down over time, but that's about what we've seen pretty consistently over our history. And then fleet comment I'll make there is it's vehicle limited. So it's outside of transit buses. There's more way more outsized demand for vehicles than there is supply because it pencils, right? So the minute that it's built into the cost structure of the business and it looks like it's a cost savings and an improvement, obviously, there's a lot of demand that will get stacked up against that. And right now, it's behind vehicle-wise, fewer vehicles and production quantities there than there is for passenger cars. When that catches up, that segment is going to be really important, really important to us. And you're already seeing it move the needle on our overall billings.

All right. Well, we, unfortunately, have run out of time. So we're going to have to stop it here. Pasquale, I really appreciate you joining us for today.

Thank you. Really appreciate it. Thanks all.