EVgo, Inc. (EVGO) Earnings Call Transcript & Summary

Hello, and welcome to the EVgo, Inc. Q1 2025 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Heather Davis, Vice President of Investor Relations. You may begin.

Good morning, and welcome to EVgo's First Quarter 2025 Earnings Call. My name is Heather Davis, and I'm the Vice President of Investor Relations at EVgo. Joining me on today's call are Badar Khan, EVgo's Chief Executive Officer; and Stephanie Lee, Executive Vice President, Accounting and Finance. Our CFO, Paul Dobson, is out this week due to a loss in the family a few days ago. Today, we will be discussing EVgo's first quarter 2025 financial results, followed by a Q&A session. Today's call is being webcast and can be accessed on the Investors section of our website at investors.evgo.com. The call will be archived and available there, along with the company's earnings release and investor presentation after the conclusion of this call. During the call, management will be making forward-looking statements that are subject to risks and uncertainties, including expectations about future performance. Factors that could cause actual results to differ materially from our expectations are detailed in our SEC filings, including 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.

EVgo had yet another record quarter of strong results. Customer consumption on our network continues to rise with average daily throughput per public store rising by 36% versus the same quarter last year and up more than fivefold in 3 years. The combination of higher throughput per store and more stores resulted in an overall public network throughput growth of 60% versus last year, with Q1 representing the 13th consecutive quarter of double-digit year-over-year growth in charging revenues, which is every single quarter since we've been public company. Total revenue grew 36% year-over-year and a near tenfold growth in 3 years. We added over 180 new operational stores this quarter, including eXtend stores and now have over 4,200 operational stores. And finally, we began the year with a strong cash balance and prospects. We ended the quarter with $171 million in cash, cash equivalents and restricted cash. And at the start of April, we received the next quarterly advance from the DOE loan as expected. As you all know, in December 2024, after an 18-month process, we closed on a $1.25 billion loan guarantee with the Department of Energy Loan Programs Office that secures financing for our trajectory past adjusted EBITDA breakeven this year, leverage free cash flow breakeven next year and more than triples our installed base over the next 5 years throughout the United States. This puts us in a particularly strong competitive position within the EV fast charging landscape. Looking at the macro environment, the impact of tariffs on EVgo, both directly and indirectly, is expected to be relatively minimal. That's because only approximately 25% of the total CapEx cost per store is subject to tariffs with the remainder being domestically sourced equipment and raw materials and construction costs. Our fiscal 2025 net CapEx estimate includes CapEx for 2025 vintage stalls as well as spend incurred in 2025 for 2026 vintage stalls. And in fiscal '25, we expect it to incur around $45 million to $50 million on imported chargers. However, we already have either in inventory or on shipping containers just under half of that spend for imported equipment. Therefore, we expect an impact of around $4 million to $5 million depending on what the final tariff rate might be for these imports, what we negotiate with our suppliers and whether we're able to expand our existing U.S. sourced production. In addition, we expect to deliver $10 million in CapEx efficiencies this year that more than offset the estimated impact of tariffs in 2025. Because we are an owner-operator and not an equipment seller, none of this is expected to impact adjusted EBITDA for our charging business. This past quarter saw particularly strong growth in non-Tesla EV sales, which grew over 35% compared to Q1 last year. Chevy Equinox EV, Honda Prolog and Hyundai Ioniq 5 are amongst some of the best-selling non-Tesla models. It's especially encouraging to see this as the MSRP for the Equinox starts at around $35,000. Importantly, our business is increasingly not reliant on new EV sales in any 1 year and is instead reliant on the overall number of evenings on the road. We estimate less than 10% of 2025 revenue to come from new EVs purchased this year, and that percentage will shrink going forward as the EV car park grows. In addition, EVs sold in the U.S. appear to have more domestic content on average versus ICE vehicles. Therefore, tariffs may have a bigger impact on ICE vehicles than EVs in the U.S. According to the DOE, the nationwide growth of DC fast charging stations has, in fact, been flat for the past 7 quarters, with Q1 actually showing a 16% decline from the prior quarter. In a higher tariff environment, we expect the supply of new fast charging will continue to fall. That is because roughly half of new fast chargers deployed are sold to site hosts by companies like ChargePoint, which will likely see slower growth as site hosts pause or reconsider what they may view as discretionary investments outside of their core business, especially if these companies were relying on federal incentives that may also be on hold. 7% of new fast chargers that are funded by automotive OEMs other than Tesla are also likely to see slower growth as OEMs allocate capital to other priorities. Tesla's share of new fast charging has declined from around 70% in 2022 to less than 20% in the most recent quarter. And like other OEMs, it's unclear whether Tesla remains committed to the growth of fast charging given their other priorities. Oil and gas companies funding DCFC chargers made up only 1% of new chargers this past quarter according to DOE and have already announced changes to their capital allocation priorities. That leaves 14% of new chargers funded by a large number of small private companies that we expect will struggle to attract financing in this environment, especially because of their small scale. Unlike almost every other fast charging owner and operator, EVgo is singularly focused on fast charging and has the financing in place, allowing us to continue to grow. As a result, demand for fast charging represented by the growth in EV VIO far exceeds the supply of fast charging stations nationwide. This supply-demand imbalance has been one of the factors driving the fivefold growth in EVgo's throughput per public store over the past 3 years and will continue to drive growth in throughput per store for the foreseeable future. S&P Global's most recent base case forecast for March this year that takes into account the new administration's policies in electric vehicles suggests 31% of new car sales being fully electric by 2030, slightly above where China already is today. The downside forecast is 21% of new car sales below where China is today, translating to between 19 million and 26 million EVs on the road by 2030. This is half of the target established by the Biden administration of 50% of new car sales by 2030. S&P Global's forecast for the supply of DCFC grows to 135,000 stalls by 2030 from around 50,000 at the end of 2024. In order to maintain the current ratio of EV to DCFC, the industry would need to deploy 40,000 fast chargers a year, which is over 3x what was built in 2024. Given that we've now had 7 flat to declining quarters of growth in DCFC supply, a flat growth scenario of no faster growth than today may even be too optimistic in a higher tariff environment. The result is a growing ratio of EV VIO to DCFC, which has driven the growth in EVgo throughput historically and a significantly higher ratio in both S&P's base and downside forecast, which we expect will drive ongoing growth in EVgo throughput and utilization per stall in addition to growth due to network expansion for the foreseeable future. In a higher tariff environment, we may see impacts to both the numerator and denominator in this ratio, leaving the overall supply-demand picture potentially even more attractive for EVgo than without the impact of tariffs. Let's now turn to progress on our 4 key priorities: improving our customer experience, operating and CapEx efficiencies, capturing and retaining high-value customers and securing additional complementary nondilutive financing to accelerate growth. As always, improving our customer experience remains our #1 priority, and our strong momentum from last year has continued this quarter. Customers want a charger to be available when they pull up to an EVgo station, and we are deploying larger sites where our standard configuration is now 6 to 8 stalls per site. At the end of the first quarter, 21% of our sites had 6 stalls or more. We continue to deploy ultrafast high-power chargers. The number of stalls served by a 350-kilowatt charger is now 52%, up from 38% a year ago. Autocharge Plus, our seamless plug and charge capability, continued to gain significant traction in Q1 with auto enrollments from OEM partners. Autocharge Plus accounted for 27% of sessions initiated. And finally, our key customer success metric or one and done, increased 4 percentage points this quarter versus last year with 95% of sessions resulting in a successful charge on the first try. In summary, another great quarter of achievement in improving our customer experience. We've also made excellent progress on our efficiency priorities. Most notably, we took the MOU with Delta Electronics we signed last October and converted it into a signed joint development agreement to co-develop the next generation of charging architecture. EVgo and Delta are making meaningful progress on this initiative that's expected to lower our gross CapEx per store by 30%. We anticipate production of these stalls to begin in the second half of 2026, and we plan to have a prototype by the second quarter of this year. We continue to drive operational efficiencies in our business with call center costs per call declining 37% in Q1 versus last year. Our 2025 vintage CapEx per store is expected to be roughly $135,000, which is an 8% reduction from 2024 vintage stores, including the impact of tariffs. EVgo's operations team has been diligently working to lower CapEx, and we're delivering savings from lower contractor construction price, material sourcing and increased use of prefabricated skids. We expect further improvements in G&A as a percentage of revenue for 2025 while investing in the growth of our business. We also continue to make great progress on our growth priority of capturing and retaining high-value customers. 55% of EVgo's throughput came from rideshare, OEM charging credit and subscription accounts in Q1. This provides EVgo with a relatively predictable baseload level of demand on our network. In order to drive overall utilization up while mitigating the impact of congestion, thanks to the investments we have made in our customer marketing platform and dynamic pricing, we are now averaging double-digit utilization in the overnight hours, effectively opening up capacity for more drivers during the peak hours. We expect the next major update to our dynamic pricing algorithms in the fourth quarter of this year. We launched native NAX connectors at our first site in February, and the pilot of the technology validation is going well. We anticipate adding more NAX connectors to sites over the course of 2025. Later this year, we plan to launch the first of 400 new flagship stores in partnership with GM with the goal of delivering an elevated customer experience. As a reminder, these sites will feature up to 20 stalls and come with ultrafast 350-kilowatt chargers, canopies, ample lighting, pull-through stations and security cameras and like all EVgo sites, will be located near a diverse set of amenities that customers can take advantage of while charging. Finally, we expect to expand the number of dedicated stores serving autonomous vehicle partners, which could represent a very attractive source of potential growth for EVgo, given we estimate we have a 20% share of operational sites serving this segment today. As for financing the growth of the business, we have now received both the first and second quarterly advances on our $1.25 billion loan guarantee with the DOE LPO. Slow and surely we are fully funded to add at least 7,500 stalls, more than tripling our installed base over the next 5 years. Looking ahead to the rest of the year, we expect to complete transfer of our 2024 vintage 30C income tax credits. Over the course of this year, we expect around 30% of our 2025 vintage CapEx to be offset from state, local and federal grants, utility incentives, OEM payments and 30C. Federal incentives in the form of the technology-neutral 30C alternative fuels credit and NEVI represent approximately 10% of our 2025 vintage CapEx. As we've said before, we are not particularly reliant on federal incentives. And our next-generation architecture program is targeting at least a 30% reduction in gross CapEx per store, significantly more than the value of these federal incentives. And finally, given the very strong cash flows from our operating assets, we continue to receive inbound interest and evaluate additional complementary nondilutive financing opportunities that would help fund the growth of any charging stations not included in the DOE loan funding to accelerate our growth and to provide diversity in our funding sources. Stephanie Lee will now cover our financial performance for Q1, together with our outlook for 2025.

Thank you, Badar. Over the last 3 years, we have grown our operational installed base by 2.5x, while our revenues have grown over 12x. Increasing our scale and maintaining our focus on costs allows us to deliver improving bottom line performance. We continue to expect to achieve our target of adjusted EBITDA breakeven in 2025. Our public network throughput per stall has grown over 3x in the last 2 years, significantly outpacing our charging stall growth. This accelerated performance is driven by multiple factors we've previously discussed, namely EV vehicle miles travel parity with ICE, significant growth in rideshare, increased multifamily dwellars among EV drivers, increasing vehicle charge rates and larger, less efficient EVs coming to market. Throughput per public stall was 266 kilowatt hours per stall per day in Q1 compared to 196 a year ago and roughly flat sequentially, which reflects the seasonal shift from Q4 to Q1 as we saw last year. In the first quarter, total public network utilization increased to 24%, up from 19% a year ago. 67% of our public stalls had utilization greater than 15%. 54% of our public stalls had utilization greater than 20% and 32% of our public stalls had utilization greater than 30%. Each of these utilization categories have grown significantly over the last 2 years as the entire utilization curve is shifting to the right. Total throughput on the public network during the first quarter was 83 gigawatt hours, a 60% increase compared to last year. Revenue for Q1 was $75 million, which represents a 36% year-over-year increase. This growth was primarily driven by charging network and extend revenue. Total charging network revenues of $47.1 million grew from $31.6 million, exhibiting a 49% year-over-year increase. eXtend revenues of $23.5 million increased from $19.2 million in the prior year, delivering growth of 23%. Charging network gross margin in the first quarter was 37.1%, down 370 basis points from the prior year. The prior year quarter included $2.5 million of breakage revenue from one of our OEM charging credit programs, which is winding down and similar levels of breakage were therefore not expected to recur. Excluding the impact of breakage revenue, our charging network gross margin would have grown 130 basis points year-over-year. Compared to the fourth quarter of 2024, charging network gross margin declined primarily due to higher maintenance costs incurred to improve reliability of our charging experience and higher property taxes, which typically increase on January 1 of each year. Our Xtend revenue for the first quarter was up from the prior year due to more construction projects in process or completed and the recognition of certain construction change order costs that were incurred in the prior year. Adjusted gross profit was $25.4 million in the first quarter of 2025, up from $17.3 million in the first quarter of 2024. Adjusted gross margin was 33.7% in Q1, an increase of 240 basis points compared to last year. Adjusted G&A as a percentage of revenue also improved from 44.4% in the first quarter of 2024 to 41.6% in Q1 of this year, demonstrating the operating leverage effect. Adjusted EBITDA was negative $5.9 million in the first quarter of 2025, a $1.3 million improvement versus negative $7.2 million in the first quarter of 2024. Now, turning to our 2025 guidance. EVgo continues our top line growth and path to profitability in 2025. Our stall build outlook for the year remains the same with 1,200 to over 1,400 new stalls comprised of 750 to 815 public network stalls, 50 to 85 dedicated network stalls and 450 to 550 EVgo eXtend stalls. We continue to expect total revenue in the range of $340 million to $380 million. As a reminder, we estimate only 10% of our total 2025 revenues are tied to new EV sales. We continue to expect charging network revenue to be 2/3 of full year revenue. We anticipate sequential quarterly growth in our charging network revenues as we continue to expect quarter-over-quarter and year-over-year throughput growth. Similar to last year, we expect to see higher summer electricity costs impacting Q3 charging network gross margin. We continue to expect full year eXtend revenue to be broadly flat to last year with slightly lower revenues in the second half of 2025. We expect growth in full year ancillary revenue with most of that growth in Q4 driven by the dedicated fleet business. We expect adjusted G&A to increase modestly throughout 2025 as we continue to make investments in areas such as our next-generation charging infrastructure. We continue to expect improvements in charging network gross margin and adjusted G&A as a percentage of revenue, driving bottom line adjusted EBITDA improvement. We, therefore, continue to target adjusted EBITDA breakeven in 2025 with a range of negative $5 million to positive $10 million. We continue to expect fiscal CapEx net of offsets to be in the range of $160 million to $180 million. We are ramping up our mobilizations with approximately 75% of our 2025 vintage public network calls expected to operationalize in the second half of 2025. Q4 is expected to account for approximately 50% of total 2025 public network calls. Operator we should now open the call for Q&A.

[Operator Instructions] Your first question comes from Andres Sheppard with Cantor Fitzgerald.

Congratulations on another great quarter. Maybe just to start, you touched on this briefly in your prepared remarks, hoping for maybe a bit more color. I'm wondering if you could maybe just give us a bit more cadence in terms of guidance for the rest of the year, particularly around cost of energy, ASPs. You mentioned Q3, I think, will be the weakest. But basically, ASPs, gross margin and how we should think about the ramp-up of the DOE loan stores throughout the rest of the year?

And, yes, we provided guidance. It hasn't changed since the last quarter. On the ramp-up of the loan, we provided a stall build schedule on the last quarterly call, and that remains the same. So that's 750 to 850 stalls public network stalls for the full year, together with about 50 to 85 dedicated stalls, 450 to 550 stores through our extend program. So that hasn't changed. A also hasn't changed, we expect about 75% of the public stalls to be in the second half of the year, about 50% in Q4. So you can kind of work out Q2 given we've got Q1. In terms of the rest of the year, Q3 is typically the quarter as we saw last year, where we've got higher energy costs, that will really be the same shape for this year. In terms of average selling price, I'd expect us to see prices where they are today, maybe slightly expanding. I mean, Heather, Stephanie, any other comments in terms of guidance?

No, I think that covers it.

Got it. Okay. That's super helpful. I appreciate all that color. And maybe just a bit of an odd question. But as we are seeing an acceleration in autonomous vehicles and self-driving technology, can you maybe remind us what are EVgo strategy to try to capture some of this market and how you might address autonomous vehicles charging in the future?

Yes. Look, we -- as we said last quarter, we broke out the number of stalls that are serving -- that are dedicated stalls serving the kind of autonomous vehicle segment. And so that's separated out in our store count from last quarter. And we more than doubled in 2024, the number of stalls that we currently already have in place serving that segment. We estimate -- there's not great data on this, but we estimate we've got about a 20% share, so a pretty good share of dedicated stalls serving this segment. And so we're quite excited by it. These stalls have a different cash flow profile. They're contracted cash flows versus our public stalls, which rely on charging revenue, of course. And so we're quite excited by it. We do think it could be a source of interesting upside for the business given the regulations around the space seem to be a little bit easier than where we had them in the past.

The next question comes from Chris Dendrinos with RBC Capital Markets.

I guess maybe on the financing side of things, and it was great to see that you all got that second advance from the DOE. I guess maybe on the private side, and you mentioned you're exploring some funding options. Can you provide an update on timing around that? And maybe what specifically are you all kind of looking at as far as options go?

Yes. I mean just on the first point, we are obviously very happy with where we are in financing. We expect quarterly advances in line with the agreement that we signed with the DOE in December. And this second quarter advance was in line with our ask and our plans. In terms of additional financing, we do continue to get -- just these cash flows generate strong -- these assets generate strong cash flows, we continue to get quite a lot of interest from others who are looking to finance further accelerate the growth of the business. And so that's really where the conversation is, are there stalls that are not eligible to be funded by DOE, for instance, the AV space, but potentially others. But also just it makes good business sense to diversify your sources of funding. In terms of timing, we're in the dialogue today with folks. If we find something that is attractive for ourselves and counterparties, then we'll obviously look to execute. And I expect that, that might take place some point during the course of this year.

Got it. And then I guess maybe just a follow-up on that point around it being attractive and the ability to accelerate. I guess, are you indicating that you would look to potentially accelerate activity if you find an attractive, I guess, arm of financing? Is that correct?

Yes. I mean, over the course of the 5 years, the schedule that we've laid out in the last 2 calls showed what the stall schedule, build schedule would look like under DOE loan financing. And so what we're looking at is both from a balance sheet and operational perspective, what would it take to increase that level of stall build-out. What we've got today gets us to about 11,000 stalls in about 5 years' time, and we provided those economics in the last 2 calls, what we're asking ourselves is what would it take to accelerate that schedule buildout over the next 5 years.

The next question comes from Chris McNally with Evercore ISI.

So I appreciate all of the 2030 comments. I think we all see the huge growth in the car park that will eventually come. I think our question is around maybe your views on the potential changes of revoking IRA and/or the EV EPA mandates, which may come. And sort of our thought is what if we get sort of that worst-case scenario in the upcoming tax bill in the second half where incentives are removed and 2030 targets are removed. My question is, how does EVgo potentially change their rollout strategy geographically within the U.S., Places like California become even more valuable given EV density, whereas maybe expansion states, there's a change in the math as a result of regulation changes. So big picture question, but I would appreciate your thoughts.

Yes, Chris, I mean, I think taking a step back, as a reminder, our business is not -- we're not selling cars. We're selling kilowatt hours. And so what drives our business is both the demand for kilowatt hours, which is represented by the growth in VIO, electric vehicle VIO as well as the supply of industry-wide DC fast chargers. And that's the sort of demand supply that, in fact, impacts the sale of kilowatt hours. And so what we see as we played out on that slide is even in the most conservative forecast, which takes into account sort of a shift in federal policies with respect to sale of electric vehicles, we would expect to see the ratio of cars to nationwide industry-wide fast chargers to still almost double. And so that supply-demand picture remains very attractive for us given that it's only grown by about 1/3 in the last 3 years. And yet in that same time period, our throughput per store has grown fivefold. And so I think that, that is how we think about the sort of situation. This is a pretty resilient. The owner-operator of fast charging business model is actually quite a resilient business model. With respect to your specific questions, sure, if we find that states continue to offer incentives for electric vehicles and other states aren't offering such attractive incentives, then we would, of course, expect to see more EV sales in individual states. Our network plan that we update continuously takes into account all of these sorts of forecasts, and we adjust. At any one point in time, we are looking at a network plan that goes out 2 or 3 years that gives us quite a lot of optionality. We've got about 30,000 stores that we've already identified across the United States that meet our return expectations and the kind of returns that we're demonstrating today. So we feel we've got tons of flexibility and optionality to be able to shift to wherever demand is.

And do you have a sense in those medium-term geographic plans? I mean if we're talking about EV VIO, to your point, the range of 20% to 26% in your forecast, sort of 7% to 10% penetration of the car park. Where do you see sort of the most attractive markets, meaning where the return is the highest when you think about California, right, where it's sort of approaching Europe-like penetration ratios. Just any rules of thumb that help us when we think about where a market becomes the most attractive once it hits a penetration level of the CapEx.

Yes. I mean, look, for us, when we think about return, we're obviously thinking about the productivity of the stores, so the kilowatt hours, the throughput per store per day, but we're also taking into account the cost of stall of the CapEx, the cost of construction might vary across the United States, the availability of incentives. I will tell you that overall utilization, as we showed today, is 24%. We actually have higher utilization outside California. We've got more throughput in aggregate outside California. Some of our fastest and top states today are places like Texas, Florida, Arizona, Michigan. And none of these states are in the Clean Cars 2 program that California has adopted. So I expect these -- I expect to see the growth in those states continue as they have done in the last couple of years.

That's really great helpful info on the sort of the micro markets, the examples you gave.

The next question comes from Bill Peterson with JPMorgan.

Nice job on the quarterly execution, and it's nice to see the reiteration of the financial and other factors. You'd sound them alone. It seems like all systems are go, but just to remove any doubt, are there just any remaining items that you and the team are working through? I guess I just want to try to understand how the current engagements are? Are they constructive? Or are they still probing around the edges or doing further investigations? And we understand that a lot of people at the LPO have left or being forced out or leaving out their own will or whatever. Just what's your current level of engagements with the LPO.

Yes. I mean it's -- those are very productive engagement with the LPO team. I really can't comment on their overall staffing levels other than to say that the folks that we're working with are the same folks that we're working with over the last several months. Our quarterly advance, both first and second and the monthly -- we have monthly draws and reimbursements in line with our agreement. They're all progressing in the way that we expected. And so you could call this sort of business as usual activity. We're several months into this at this point, and we're, I think, pleased with how it's going.

That's great. Just wanted to make sure. And then I had some clarifying questions on the tariffs, and thanks for the color on that. So what are the assumptions around the tariff rate to get to this $4 million to $5 million? I guess, think of 32% on Taiwan as an example. Is that the right way? And I guess on this $10 million in efficiencies, can you provide any additional color on that? It sounds like you're getting that anyway regardless of where the tariff environment still stands. And then maybe looking into next year, it sounds like you reiterated the sort of 30% CapEx reduction with the program we have with Delta. But is that reduction still assuming the same tariff environment we have today? And if so, like how do you get there?

Yes. So Bill, the $4 million to $5 million, that's a fiscal year, not vintage year. So that is the impact on the calendar year capital spend that we incur in 2025. And that's based off about $45 million to $50 million of imports of imported equipment. where we've already got about half of that either already here in the States or on shipping containers, so there's no tariff on that. We expect about a 10% tariff on a quarter of what we is not already here and about a 32% tariff on the other quarter. And that's really how you get to the $4 million to $5 million. In terms of the efficiencies, yes, these efficiencies, we had a -- as we said last quarter, and we reported a 9% improvement reduction in our vintage 2024 CapEx per store versus what we were expecting. We were expecting about 160. We took about 9% off that in 2024. This year, we're expecting about an 8% on versus where we ended 2024, and that's just our operations team just doing about business, construction pricing, material sourcing, prefab skids, -- we expect it will be about 40% of our mix this year. It's going to be a little higher. The cost per skid is going to be a little lower. So it's just business as usual activity. For FY '26, we haven't provided guidance specifically for vintage FY '26 CapEx, but you would expect to include the benefits from all the savings that we captured so far. In addition, by the second half of '26, we'll start to roll out our new charging architecture through the development with Delta Electronics. That's a 30% improvement on that 160 that we began -- that we're expecting to begin 2024. So we're -- this is just business as usual. We think that this is a real source of competitive advantage for EVgo versus the dozens of other fast charging companies that you're all aware of. where we've got scale, we're able to partner with a global leader and really drive down efficiencies in the CapEx. So we're pretty pleased with where we are.

Congrats on the quarter.

The next question comes from Chris Pierce with Needham & Company.

Can you just walk me through, when I think about dynamic pricing, and you hit on it on the call about driving utilization in the overnight hours, I think about cost savings to the driver. But you guys grew ASP per watt mid-single digits year-over-year. I just want to get a sense of pricing power on the network you have? Or how are you able to -- like how those 2 sort of balance out?

Yes. Look, with dynamic pricing, what we're doing is we're looking to maximize margin. And so in some places, we're looking to -- we may see ourselves increase price. In other places, we may see ourselves reduce price, but with the goal of maximizing margin. I would say that, again, this is another one of our sources of real competitive advantage versus these dozens of other smaller companies in the fast charging space or companies that just aren't focused on utilization for whatever reason. Through both the investments we've made in our marketing, our understanding of customers, our reach out to customers, the dynamic pricing, which is effectively pricing signals, we are shifting who is charging at what time of the day where we are trying to open up hours of the day that might be peak hours of the day, where we may have price sort of inelastic customers. And that really is serving us very well. We expect the next round of the algorithms in this dynamic pricing to go live in the fourth quarter where I'm looking for the next level of sophistication here. And this is not -- we're not talking about something being reinvented here. We're taking kind of concepts that have been very successfully executed in other parts of the economy into the space.

Okay. And is it safe to say you haven't seen anything -- any demand signals or anything that would cause you to back off the level of pricing power you think you have in the network?

Chris, I didn't fully capture the question, but I think the answer is, have we seen anything that would cause it to back off? The answer is no.

Okay. And then just lastly, housekeeping. Can you remind me like on the typical seasonality? I know this is sort of a young business and you've had the growth you've had, so it's sort of hard to pick out the seasonality. But network throughput down modestly sequentially, but how should we think about seasonality the rest of the year? And then when you layer on SA growth too, like how should we think about the cadence of network throughput?

Yes. I mean, look, so network throughput is -- was actually kind of flat, to be honest. We had some rounding. So last quarter, we rounded up. This quarter, rounding down. So network throughput is kind of broadly flat, which is pretty much where it was almost exactly last year between Q4 and Q1. And so we expected that certainly. We'd expect to see network throughput obviously grow in Q2 and Q3 and Q4 as we -- same shape we saw last year sequentially from Q4 to Q1. That really aligns with sort of VMT, vehicle miles traveled for EVs across the United States. So I mean that's really how we think about the profile.

[Operator Instructions] Your next question comes from Craig Irwin with ROTH Capital Partners.

So I wanted to ask about the progress with the Tesla connectors, the NAX connectors you mentioned earlier in your prepared remarks. Can you maybe frame out for us where you're at with this? Are you really just in testing? Or will we potentially see dozens or more stations retrofit over the course of the year? And is it fair for us to start asking about the new customers added that are Tesla customers? I know you had another strong quarter with 119,000 new customers. But is the Tesla fleet starting to layer in and help you on the demand side?

Yes, Craig, so I mean, clearly, with such a high percentage of well over half or more of overall EV VIO being Tesla drivers and the fact that our charging stations are faster at 350 kilowatt and they tend to be closer to where all drivers, including Tesla drivers live, work and run ons versus highway stations, we are very attracted to capture in this segment. But we need to do 2 things. We need to make sure that the system they work. And so what we've been doing this past quarter is going through that technology validation. That's both in terms of the connection, but also the speed at 350 kilowatt, we need to make sure we've got the right cables that can accommodate a higher speed than a Tesla supercharger. And the second thing that we need to make sure that we're paying very close attention to is if we take out a CCS connector, we don't end up killing demand for some period of time before the next cable catches up to where the demand was in the CCS cable. And so that's really what we're -- like everything at EVgo, it's very data-driven. So we are looking at sites across the country that perhaps have opportunities for us to swap out a lower-performing CCS cable with a NACS cable that is also located close to where Tesla drivers are based, which is, frankly, everywhere. So it's quite data intensive. We do expect to start rolling out these cables, but it's probably going to be on a retrofit basis, maybe in the 100 to 150, potentially give or take around those sorts of numbers over the course of this year. For our next-generation charging architecture, which will be the second half of next year, we expect there'll be all NACS cables from the outset, if not before that, with the current generation of chargers.

So my next question is on the eXtend revenue. So again, this quarter was pretty strong, and it's nice to see you building a network out there with partners and incremental profits, incremental driver service is always a good thing. Do you have potential for other eXtend customers that could come in over the course of the next year? And how should we think about the shape of Xtend growth, the revenue contribution in this year? Is it going to be as back-end loaded as the style build-out? Or is this something that's going to be a little bit more linear as we look at the year?

Yes. So just 2 things there on the eXtend business. We are not looking at -- we're not actively pursuing more eXtend partners, Craig. We've got a great relationship with PFJ, the product company, and we're deploying throughout the course of this relationship, 2,000 stores. The build schedule there, we gave an illustrative view on the last quarter. So if you look at the last quarter slides, there's a sort of little bar that's sort of semi shaded that gives a sense of what that schedule could look like through 2028. In terms of this year, the eXtend business is broadly flat in terms of revenue versus last year, slightly lower in the second half versus the first half. And remember, the revenues for eXtend are both equipment sale as well as construction revenues. So sometimes it can be a little lumpy, but it's -- we expect it to be broadly similar to last year, a little less in the second half versus the first half.

This concludes the question-and-answer session. I'll turn the call to Badar Khan for closing remarks.

Well, thank you, everyone. We had yet another strong quarter. With a strong balance sheet, we are in a particularly strong competitive position. Together with a business model that's minimally impacted by tariffs and a supply-demand picture that should underpin continued growth, we are well on our way to delivering adjusted EBITDA breakeven this year, and I look forward to providing updates throughout the course of this year. Thank you very much, everyone.

This concludes today's conference call. Thank you for joining. You may now disconnect.