Hello and welcome to the Alfen 2022 Q3 trading update call. My name is Laura, and I will be your coordinator for today's event. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Marco Roeleveld, the CEO, to begin today's conference. Thank you.
Thank you, Laura. Good morning, everybody, and welcome to this webcast regarding the 2022 third quarter trading update of Alfen. This webcast and the questions that may come forward are handled by the management board of Alfen being Jeroen van Rossen, CFO, Michelle Lesh, CCO and myself, Marco Roeleveld, CEO. We are happy how the third quarter for Alfen has progressed. A very strong revenue growth in combination with a positive EBITDA development. In this webcast, we will start with the highlights of the third quarter of 2022, followed by a short review per business line. Next, we will go in more detail regarding our financials and outlook. We continue with slide three with the highlights. In the third quarter, we realized EUR 123.2 million in revenue. This represents a growth of 103% compared to the same period last year.
This growth was largely driven by strong growth of EV charging equipment and the battery energy storage. The gross margin was 34.8%, which is 2.1% points lower than the same period last year. As a percentage of revenue, the adjusted EBITDA improved from 16% in the third quarter of last year to 19.9% in the same period this year. We are positive about all drivers for future growth. After the COVID pandemic and start of the Ukraine conflict, most European governments have expressed their commitments to further facilitate the energy transition. In order to keep our working capital capabilities in line with the growth of our activities, we've increased our working capital facility with our bank from EUR 30 million - EUR 100 million and our bank guarantee facility from EUR 10 million - EUR 40 million.
Based on the progress in the third quarter and the positive market drivers, we iterate our full year revenue outlook in the range of EUR 410 million-EUR 470 million. In the coming three sheets, we'll go in a little more detail on each of our business line. We start with sheet four with EV charging equipment, where we have almost tripled our revenue compared to the same period last year. We benefited from higher EV adoption in our core markets, leading to a strong demand for EV charge points in all segments at home, semi-public places like offices and in the public segment for on-street parking. We continued our internationalization strategy by further strengthening our international organization. In this quarter, about 72% of revenue was generated from outside of the Netherlands.
This quarter, we produced 63,500 charge points, a growth of 126% compared to the same quarter last year. The number of charging stations produced is lower than in the second quarter of 2022. As indicated already at the half-year results, the first half-year was characterized by an exceptional post-COVID demand for charging stations. We now continue on sheet five with Smart Grid Solutions, where the revenue was 70% higher than the same period last year. The private network business continues to be hampered by supply chain pressures. Project execution takes longer under current supply conditions. The Dutch grid operators are scaling up operationally to deliver on their investment plan, but it's not been fully materialized yet in 2022.
The challenging economic environment is hindering progress, but steps to scale up are taken on an ongoing basis. In the third quarter, we produced about 800 stations, a decline of 12% compared to the same quarter last year. The revenue was higher due to the mix of substations. We go to slide six regarding energy storage systems. The third quarter revenue was EUR 17.1 million, and this is to be compared with the EUR 2.2 million in the same quarter last year. As we have communicated in the previous quarterly updates that a recognition of revenue in relation to the Ellevio orders would be backloaded this year, as can be seen now in this third quarter. The increase in revenue come from both TheBattery Elements and TheB attery Mobile.
For TheBattery Elements , Alfen has projects in execution phase and the average size of the project is increasing. The increased average size of the project means that the percentage of cost in a project related to batteries is also increasing, and this trend influences the resulting growth margin. Revenue for energy storage are expected to remain volatile given the timing of component allocation and project execution has a large effect on revenue. The market momentum remains strong and our backlog continues to grow in a healthy manner due to new contract wins. Now over to you, Jeroen van Rossen, to continue the business webcast with the financial results.
Thank you, Marco. Let's now take a look at some financial highlights. As Marco already expressed, our revenue more than doubled from EUR 60.6 million in the third quarter last year to EUR 123.2 million in the third quarter of this year. This growth was primarily driven by EV charging equipment and energy storage systems. The gross margin was 34.8%, which was in line with the previous quarter, but somewhat lower compared to the same quarter last year. This is a result of price pressures in the supply chain on a wide range of components. The adjusted EBITDA was EUR 24.5 million, which was 19.9% of revenues, compared with EUR 9.7 million, which was 16% of revenues in the same quarter last year.
The main driver for the increase in adjusted EBITDA is the operational leverage. We are in a net cash position, but due to the growth and increased sizing of the company, we decided that the current working capital facility that we had did not fit the magnitude of Alfen anymore. That's why we increased that existing working capital facility of EUR 30 million and the bank guarantee of EUR 10 million to a new working capital facility of EUR 100 million and a bank guarantee facility of EUR 40 million. From the financial highlights, we now go to the supply chain update on slide number eight. From a supply chain perspective, we don't have real differences compared to what we already reported at Q2. Up until today, we have been able to manage the supply chain challenges.
The pressure remains high throughout the supply chain, and it is still rather widespread over the various components. Therefore, we continue to control the supply chain through our rigid operational processes, as we do expect that the supply chain pressures remain well into 2023. Finally, we go to the outlook on the next slide, where we start by saying that we expect that our markets will continue to grow throughout 2022. We feel that the supply chain pressure will remain well into 2023, as explained in the previous slide. Long term, we continue to anticipate positive market developments for all of our business lines. Finally, we reiterate our full year 2022 revenue outlook in the range of EUR 410 million-EUR 470 million.
We are now at the end of the presentation, where I will hand over to the moderator for any questions. Moderator, could you please take over?
Thank you very much. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. We'll now take our first question. At the tone, please state your name and company before posing a question. Your line is open. Please go ahead.
Hello, good morning. Emmanuel Grib from Kempen. Thanks for taking my questions. I will do them one by one. The first one is on EV charging. Could you give us an update on the inventory levels at the different segments and if you are seeing destocking?
Yeah. What we communicated at the end of first half is that some of our channel partners had started to build some inventory. We are seeing them deploy that inventory into projects, but we don't have line of sight to their exact inventory levels. We do see continued order intake, of course. We expect this inventory buildup to be liquidated throughout Q4 and into next year based on what we see today.
This is mainly for the private segments. What are you seeing at the public and semi-public segment?
We're still seeing strong demand in all of the segments, but we did see in Q3 stronger demand in the public and semi-public infrastructure build-out that we expect to have continue into the future.
Okay. Thank you. The second question is on smart grids. Should we already expect a recovery in the substations in Q4, or is this really rather a 2023 play?
We see that, say, the supply chain element in this sector where it is mainly oriented in supply chain elements to transformers and high voltage switchgear, that those supply elements are not that flexible. That means, for example, in solar project execution, where when the choices of voltages for the grid connections are not fully clear, we have to wait in ordering those components until the moment the project is fully finalized in design. As a consequence, there is a delay in project execution because the supply of transformers and high voltage switchgear is at this moment quite constrained. Then we talk of sometimes in delivery times of more than half a year. As directly then has also an impact that we cannot speed up the execution of the project.
We see more or less the same with the Dutch grid operators, although they of course have their investment plans and try to relate that also to already procurement of transformers and high voltage switchgear. We see there also they are limited in their growth plans in availability of those components and the availability of their own capacity to execute those projects. Although those grid operators have been announcing that they are stepping up in the energy transition and also have been getting, say, government grants to be able to invest in those areas, we see that they are stepping up and activities is delayed due to supply constraints and also being able to step up their own execution processes.
Yeah. Okay. Thank you. On energy storage, in previous quarters you kind of repeat that in this press release, but is there a little bit more of a quantitative statements that you could make on this segment? Because we read a lot about growing momentum in that market.
Yeah. As you know, we don't share our pipeline and order intake numbers, but I think we can confirm that we are seeing the momentum and we are building backlog as we communicated. We're really starting to see, you know, all of the different countries in Europe see battery storage as a key enabler of the energy transition. These projects have a longer life cycle, and so we're continuing to see interest in deploying the projects and things continue to move forward at a rapid pace.
Your order book today, is it higher than last year, for example?
We have built backlog.
Would you expect? Yeah.
What we're
Would you expect your backlog to? Yeah, sorry.
Yeah, no. What we're also seeing is that the projects themselves are getting larger. The combination of continuing to secure orders and those orders being larger also gives us, you know, line of sight to the future that the market is continuing to have momentum and that backlog is growing.
Then the final question is on profitability. You make a kind of cautious statement on the gross profit margin for 2023, referring to inflationary pressures. On the other hand, in 2022, you also had gross profit margin pressure, but the EBITDA margin will still be probably something like 400 basis points higher. Could you provide a little bit more color on how you look at that, moving into 2023? Do you still see enough drivers available to boost EBITDA margins up despite potentially a lower gross profit margin?
Well, I think. Two elements there. I think first, the Q3 was an exceptional quarter also in operational leverage. Of course, you also know that operational leverage is not a linear line, so there can be a bit more operational leverage from one quarter to another quarter, also depending on the acceleration of revenue growth. At certain instances, you need to step up again in your organization to capture the next waves of growth and operational leverage. We do feel that there are still possibilities for further operational leverage. Having said so, also the gross margin of course is only pricing is just one part of the equation. It's also about effectiveness, it's about delivery, it's about purchasing programs which gain power.
The only thing we wanted to say is this, we still see pressure in the supply chain. We still see pressure from a delivery time perspective, but we also see that suppliers are again asking for higher pricing on components. That's not new. That was also the situation in 2021 and 2022. We try to cope with that as good as possible, also taking into account how we are positioned in the marketplace, as well as in supporting our customers with their business cases and make sure that we have a continuous delivery. All elements needs to be taken into the equation. It's not that we warn and say it will by definition be a lower growth margin in 2023.
The only thing we say is this, we don't see a reduction of pressure in the supply chain yet, so we will continue to do our best efforts to cope with that.
Yeah. That's very clear. Thank you.
Thank you. We'll now move on to our next question. At the tone, please state your name and company before posing a question. The line is open. Please go ahead.
Yes, hi, Paul de Truong. Two questions for me. The first one is in EV charging, could you give us more detail in the charging points product mix? And my second question is, do you start to see commercial synergies between the storage and the EV charging divisions? Thank you.
First on the charging points and mix, what we did see in Q3 is some mix effect in terms of producing more chargers for the public and semi-public markets. Those tend to be more project-based. That's what we saw in Q3, and that's what you're seeing in the numbers. You know, we do see synergies across all of our business units, and depending on the customer, we do see interest and curiosity in how do you deploy a charging plaza that integrates with storage and rooftop solar, for example, and tied into the grid. Previously, we've announced projects that we've done in The Hague with a stadium, where we were able to implement a charging plaza like that.
Usually it's a defined project, and usually it's coming from the battery storage angle, the grid connection angle to deploy a charging plaza versus necessarily coming from the charging CPO itself. We do see interest, and especially with fast charging.
Charging stations. You know, we're primarily in the destination charging, but we do support the fast charging area with our grid connections and battery. We do see interest there to pull through battery and grid connections.
Thank you very much.
Thank you. Now, we'll move on to our next question. The line is open. Please go ahead.
Yes, good morning. Ruben Devos from Kepler Cheuvreux. I just had a question related to energy storage. Just to help us understand the reported EUR 17 million in revenue. Yeah, this is the result of how many projects coming together, really. Obviously EUR 2 million in Q3 last year, now EUR 17 million, so a very significant difference. And then, you know, for instance, you were recently awarded 10 MW battery energy storage system contract for Ellevio in Sweden. Has this already been feeding into some of the reported numbers? And then maybe a follow-up after.
I think what you're seeing is, you know, as the projects get larger, that helps support the conversion to revenue, and you're gonna see larger numbers. There's both an increased number of projects as well as an increased size of those projects. You're also seeing both our mobile division as well as our utility scale TheBattery Elements division contribute to that revenue. All of those things are coming together to help drive that growth. In terms of some of the more recent wins, you know, we are gonna start to see those convert in the future. The project life cycles, you know, really depends on the country and the project size, but it's not 30 days, it's not 60 days. Those projects tend to be more six, 12, 18 months.
We use a Percentage of Completion, so as we are able to perform work on those projects, you're going to start to see some of that revenue convert, but that also causes some lumpiness. You'll see some of those more recently announced projects in the future.
Maybe to add to Michelle's story, I can confirm that Ellevio is not yet contributing in the Q3 revenue.
All right. Just still thinking about the EUR 17 million, which was the total in 2021 and now on a quarterly basis, if you extrapolate that on an annual basis, that gets you to nearly EUR 70 million. Just thinking about capacity, considering unconstrained supply and is that the capacity you could, in theory, deliver on an annual basis already?
It's an answer which is, well, it's quite complicated to give indications on. On one hand, we don't give, say, individual forecasts per business unit. On the other hand, we have to bear in mind that for energy storage, due to the size of the projects and also due to the runtime, we have also here the possibility to already secure, say, materials quite far ahead for the actual needs of the project. Because not only at the moment the project is awarded, all kinds of things have to happen. In many situations, a grid upgrade is necessary, grid connection is necessary. What we see at this moment is that in those situations, a grid upgrade is necessary.
We have at least a lead time of nine months, at the moment, at the least, not only in the Netherlands, but also in all other countries, before we can start executing on-site. If you then translate it to, say, capacity, we also can then scale up our own capacity, also quite far in advance because we know where we have to build to. That was in the beginning with charging stations much more complex because in the growth of charging stations, there was, sometimes no time, like only for, say, a month to two months before the reorders had to already be executed. Now we can see that we can, quite far in advance plan, also scale up of activities.
Due to the lumpiness of the business also in size, the impact it has on the Alfen organization is relatively less than it was in sizing the battery, not the assembly of charging stations, where there is more direct relationship in number of employees related to the growth of the company. We are quite confident that, say, the growth we have shown, that it is also possible for Alfen to expand on the numbers you have indicated in the coming years without having major troubles in execution processes ourselves.
Okay. Maybe a final question on battery. Obviously, the prices have risen substantially of battery. If you would purely isolate this factor, I mean, one could expect that this makes investments in new battery systems less appealing, but obviously, you had strong growth this quarter, much of the backlog coming through. How do you assess the market today, considering the macro conditions you basically mentioned already throughout the press release, yeah, for EV charging then and for profitability, but also energy storage? How does that come into play then?
What you're actually seeing is that the projects are actually paying back faster, and that's driving momentum. When we're in discussions with customers, even with the increased raw material prices, and we're able to price and propose that to our customers, their business cases are still making sense, and they're still moving forward because they see that these are 10-, 15-year project horizons, and they're getting a payback much quicker than they did previously. Things are still moving rapidly.
It's not only the increase in price, the electricity price, but also the ways it goes up and down.
Yep
There's also more space to earn money with trading in the different markets.
Buying energy when the prices are low or even negative, and supplying energy at the moment they are high or extremely high. Due to the ups and downs of the prices and in combination where they are fundamentally much higher, makes that the financial capability to earn money with it is now much more improved than, say, a year ago.
Mm-hmm.
All right. Very helpful. Thank you.
Thank you. We'll move on to our next question. At the phone, please state your name and company before posing a question. Your line is open. Please go ahead.
Hello. Hello, good morning. Axel Stasse here from Berenberg. Thanks for taking my questions. I have two. I try to understand here in the EV charging. You guys recorded EUR 70 million in your revenues in the second quarter with 86,000 EV chargers sold or produced. Here in Q3, you did approximately the same, I would say top line, but delivered 63,500 EV chargers. How do you explain this difference here? Is this related to stronger than expected pricing power here? And actually a follow-up to this one. Can you maybe please elaborate a bit more on the operating leverage here? Because the adjusted EBITDA in Q2 was way lower compared to what you delivered today, and volumes went down.
If you can maybe provide more clarity on this, that would be highly appreciated. Thank you.
Yeah. In terms of Q3, what you're seeing is from a pricing perspective, we are at the top end of the market, and we've been able to maintain and hold our price. What you're also seeing in Q3 is an effective mix. We delivered more chargers for our public and semi-public space. Those chargers come at a higher price point, and that's what you're seeing in the numbers. Fewer chargers, but at a higher price point per charger, which then gives you average higher selling price for a charge point.
Okay. Okay, that makes sense. My second question is more about in terms of backlog and pipeline across all three business units today, how comfortable are you with your top line growth going into next year? What is your visibility beyond 2022? Is there one specific end market that is, you know, growing way quicker and you have more, I would say, visibility? Or yeah, can you just please maybe elaborate on this?
Yeah. What we do is we understand obviously what's happening in all of the markets across all of our business lines. As you can appreciate, we don't share our pipeline numbers, but we do have good pipeline management, good revenue visibility in terms of what's happening in each of those markets. Do we have enough pipeline coverage based on our win rate to deliver on our order intake to achieve our revenue goals? We've got good process and look at how do we qualify those deals to make sure that, you know, not just that we've got an extremely large pipeline, but it's a pipeline that's full of deals that can actually support the growth we anticipate. As you can appreciate in battery and projects, the cycle time of those is significant.
What we're closing in terms of orders today delivers on revenue for the next 9-18 months. Lead times in ACE are shorter, our EV charging business, but we still have visibility in terms of partnering with customers to understand their future plans and sit down and work through forecasts with them to make sure that we've got good visibility in that business unit as well.
Okay. Thank you very much.
We'll move on to our next question. At the tone, please state your name and company before posing a question. Your line is open. Please go ahead.
Thijs Berkelder, ABN AMRO ODDO BHF. First question is on your full year guidance. Can you explain what is needed to drop to the bottom end of the guidance and what is needed to hit the high end of your guidance range? Second question is on gross margins. Excluding, let's say, the battery effect in storage, can I conclude that gross margins are roughly flat in the other activities? Third question is on growth, let's say, projections towards 2023. I'm currently seeing on social media a really large recruitment campaign unfolding from Alfen. You're clearly preparing for strong growth in 2023 from a people perspective. Can you maybe specify where this staff expansion is particularly focused upon?
Let's start with answering the question, Thijs. On the bandwidth, we looked at the whole situation and then we said, well, from a bandwidth perspective, it depends a bit on the execution of the project. We are aiming, of course, for achieving that bandwidth. We do not fear that we will drop below the bandwidth and something really strange needs to happen. At the same time, we also are not able to fully execute all projects precisely at the moment that we want. There is always a bit of a couple of millions more or less, if you look at that bandwidth level.
For now, we said, well, what we see happening in the marketplace, still supply chain pressure high, we stick with the bandwidth as it is. The second question is on the gross margin. I can confirm that the gross margins are flat. That's, that is indeed the case. Last, happy that you noticed that we are more visible on the social media as well, because we are transferring a bit more into those areas, where we were already present, but we put more emphasis on it. I'll give the compliment to the recruitment team as well. It's not particularly new because we are used to, let's say, hiring 100+ people on a yearly basis.
We will continue doing so, because as you say, long-term, we don't see a slowdown of the energy transition, so we need to keep on growing our company as well. It's not in a particular area, it is all over the place. It's for R&D, it's for staff, it's for direct labor, it's for work preparation. We look for people in a variety of areas, and we will keep on doing so.
Okay. Maybe a follow-up on EV charging on the revenues versus charging points in Q3. Is there also an explanation that you maybe sold a bit more charging points from your inventory in Q3 versus produced and that let's say will partly reverse in the fourth quarter? Can we expect in the fourth quarter, let's say you again building inventory for clients ordering in 2023 and at the same time clients destocking a bit while clients are expected to restock again early 2023?
Yeah. Thijs, we don't build inventory ourselves. What we do see is our channel partners have bought chargers and put them into inventory themselves, but we build and ship. We're not seeing that we have built inventory in Q3. What we're seeing is more public and semi-public charging infrastructure being deployed. Those tend to be projects, and those are the units that primarily shipped in Q3 to support those project deployments. The inventory build tends to be on the home segment, the singles, where the installers are going and installing at a consumer's home, for example. That's where we saw some inventory buildup that we communicated at the end of first half. We ourselves are not building the inventory.
Okay. Clear. Just to have some data, can you more or less give a megawatts data based on the revenues you booked in storage?
No, we're not communicating that right now. I think, you know, following some of our news flashes that we send out on some of those key projects, you know, we are seeing increased project sizes moving up from, you know, 1-2 MW per project, to the 5-10 MW per project. That we're starting to see as an industry trend, that the projects are getting larger.
Yeah.
Yeah.
Wouter, we had, say, also quite a large number of mobile energy storage systems. There, say the price point is fundamentally different than one of, say, of a 10 or 20 MW system, which is a grid scale-oriented one. That makes also the interpretation of megawatts quite complicated. Same as that in the grid scale project, we have now projects where they vary, what we call them, from 1C to, say, two now, or 3C. That means also the numbers of batteries in relation to the grid connections are also getting more variances, and therefore the interpretation of numbers gets more and more complicated.
Yeah. That's why we're asking these questions. This might be another question. In storage revenues, what is, very roughly, let's say then in this quarter, the split between elements and mobile, is that something like 70/30 or so, or 80/20? Again, looking at your full year guidance, you're quite explicit in your guidance on EV charging revenues. Well, that more or less seems to assume that you expect a big drop in revenues in Q4 for smart grids and/or for energy storage again. Is that correct?
I think what we try to say is we do look at a healthy pipeline, healthy order to a revenue conversion. I think in energy storage, although that's a bit more of a still lumpy business where from a quarter to a quarter you can have a bit more, a bit less, depending on execution of projects. The inflow of course of mobile storage systems which you can more produce in a flow is of course contributing to a less lumpiness of that business. That helps. I think what we try to say is, well, we see a continuing trend with energy storage as well as with the smart grids.
We said from an EV charging perspective that we expect that the revenue probably will be somewhat lower than it was in Q3, because there we said for the second half of the year, looking at a year-over-year basis, you can expect around 100% growth compared to last year. Well, if you look at those numbers.
We can see that Q3 was relatively strong, and we reiterate that statement. It is inevitable that the revenue that we expect now for Q4 in EV charging will show somewhat of a drop.
Yeah. That's clear. I was more asking about the drop potentially in the smart grid in Q4 for supply chain or delay reasons. Is that then?
Not to be expected.
Okay. Okay, that's clear. Thank you.
We'll move on to our next question. At the tone, please state your name and company before posing your question. Your line is open. Please go ahead.
Hi. Good morning. It's David Kerstens from Jefferies. A couple of questions, please. First, on the mix effect in EV charging in the third quarter. You're saying it's related to more public charge points. I was wondering if you sell the Alfen Twin, is that accounted for as two charge points or one charge point, and is that what's causing the improvement in the mix?
Yeah. When we think about charge points, that is the number of sockets. Twin is two.
Mm-hmm.
Chargers is charge points. The public infrastructure is primarily Twins. Semi-public is also our Eve Double, which again is two sockets, two charge points, one charger.
Yeah. I saw recently there are a number of new twins coming up from Allego using the Alfen equipment. Is that what's driving the growth and the mix in the third quarter?
We've got many customers that are deploying our infrastructure. Allego is one of those customers. If you look internationally, where 70% of our revenues came from, we're also seeing significant growth in some of those other markets to support this public and semi-public rollout.
Yeah.
When you look at.
I think we should say.
Sorry.
Michelle Lesh, it's not only related to, say, public. It is public and semi-public.
Semi-public, yeah.
Whether it is related to offices, as an example, we see that those type of projects have been quite strong in execution after the release of COVID.
When you sell the Twin with two sockets, is that more than double the price of a single charge point?
Yes.
Yes.
Yeah. Each piece of charging equipment has different capabilities, and so the pricing is aligned with what its capabilities are. Yes, you do see the Twin priced higher.
You have to bear in mind that, let's say, for putting a charger in a public environment, the mechanical configuration, instead of having a plastic or a synthetic box, we need a stainless steel cabinet also including a grid connection. That means that the amount of materials to supply it for a public charger is way more than, say, for a charger for home application.
Yeah. The connectivity via Bluetooth or Wi-Fi, is that provided by you or is it provided by Allego?
Each of the charge point operators has got their own back office system to make the best use of the charging equipment. Allego, for example, would have their own infrastructure to, you know, pull from the charger, deploy for their customers, just like any of the other charge point operators. Our charger itself enables all of that functionality, and then we provide the interface in to the charge point operator's back office system. They then utilize that functionality in their business cases to support their customers.
Yeah. Understood. Maybe on the momentum, the total volume in Q3 was 25% below the second quarter, which you said was helped by some pent-up demand from COVID. The guidance you provide implies a further slowdown in Q4. To what extent are you already seeing that in the numbers in October and early November? Or is it just being conservative?
No, we do see it because that's precisely why we reiterated the 100% year-over-year growth ratio.
Yeah. Okay.
Just a reminder, we're not saying that we see a fundamental decline in the market, but that we more or less gave indication the reasoning is at this precise moment, let's say after COVID, many people more or less bought more than maybe necessary for the market at that time. We don't see fundamental market decline but also we don't see any fundamental market share decline. We're fully convinced that we are looking at a very growth market and we will still have growth.
Although maybe the number of growth that we had in, say, the first half year of this year and in the third quarter where we almost talked about tripling, when we talk about doubling our revenue or having 50% is even still a very strong growth percent, but not as high as we had more or less experienced in the second and the third quarter.
No. We will see continuous growth and we are looking with let's say with bright eyes to the future. Even for us, tripling of revenue in a half year is on the high end.
Yeah. Yeah. No, absolutely. You also recently announced two interesting new innovations, I think Plug and Charge and bi-directional charging. When do you expect these innovations to start contributing to revenue? Will this support building more recurring revenue stream in the future?
From a ISO 15118 perspective, we've built that capability into our charging infrastructure. That will be a capability that the charge point operators and others can then take advantage of as they deploy Vehicle-to-Grid and those types of applications with their customers. If you think about the charger itself, it's really the enabling device with the right communication protocols and other things in place to help support those use cases. But the use case itself won't be utilized until the charge point operators and different, you know, constituents in the market actually are ready to take advantage of having that capability. We still see that it's early days. While the capability is there, it's not necessarily being deployed in the market at scale yet.
To bear in mind also, you talk about, let's say, bidirectional charging. At this moment, there is only one car in the market that has only limited capabilities of having bidirectional charging. We will not only see the charging station have to be capable, but we also see we'll have to wait until, say, within the car industry, a more clear view on what to be expected there. Also that will mean the delay time, but we don't expect at this moment there will be fundamental design changes from the car manufacturer yet in the coming year. That will take a longer time before this will really materialize in the charging infrastructure.
Yeah. Understood. Maybe a final question, if I may. On the, on the balance sheet, you're saying you have a net cash position right now, but you increase your funding room. You also point at the increase in inventories due to the supply chain disruptions. Is it fair to assume that in the third quarter you were still burning cash? How do you expect that will be in the fourth quarter?
Well, I think what we say and this is a trading update, so we don't give numbers on the balance sheet, but it is not that we use the working capital facility, but we felt that facility, which was increased two years ago at a different, let's say, sizing of Alfen, didn't fit Alfen anymore. That's one element. We thought better to increase that at the moment you don't need it than doing it when the knife is on your throat. That's why we increased that working capital facility. Having said so, we already said at Q2 and earlier in the year, that we put extra working capital in to support our business models and support the business models of our customers.
That means that we drive stock. It's fair to say that part of the cash is converted into stock levels based on the fact that we favor a continuous supply chain over a standstill in the production. That was also the trend in Q3. With the high pressure that is still there in the supply chain, it's very difficult to precisely predict when those levels will come down again. We are in the lucky financial position to be able to put that money at work, and if necessary, we will continue doing so.
Yeah. Great. Thank you very much. Have a nice day.
Thank you.
Thank you. We'll move on to our next question. At the tone, please state your name and company before posing your question. Your line is open. Please go ahead.
Yes. Hi, Emmanuel from Kempen again. I still have two quick questions. First of all, there is a lot of inflationary pressure. How do you look at pricing moving into 2023? Then the second question is on your long-term targets. You have reached the top end of the 15%-20% EBITDA margin in Q3. Also on the sales growth, it looks like you're at close to the 40% that you guided for. When should we expect you coming back to the markets with an update on the long-term targets?
Yeah. Let's talk about the inflation and pricing piece to start. It really depends on the business unit. In our smart grids business, for example, where we've got longer term contracts, we utilize indexation formulas with the grid operators and partner together on, you know, what we're facing into and how do we deliver and support the right price levels with those grid operators. In some of our business where we're providing proposals in real time, we manage it by making sure that we've got accurate cost price, that we make sure we've got accurate bid validity, and then again, make sure that we're covered from a indexation perspective if the projects have an extended life cycle.
Within our EV charging business, we have mentioned before, we're already priced at the higher end of the market because of our capabilities, and we manage it by ensuring that we limit our discounts. You know, we're not doing volume discounts, for example. Really by business line, looking at our price strategy, making sure that we're accounting for the increases that we're seeing, and then working with customers and making sure that we're putting proposals out into the world that support the reality of the situation we're in today.
With respect to the medium-term objectives, in 2018 when we IPO'd, we have also indicated that the objectives were had to be regarded for a five to seven year time period. The five years almost closed down, and we appreciate your comment apart from that we're close to achieving the goals, which if I look back, is quite an achievement by itself. We appreciate the fact that we are getting questions, what is the next step? We are now considering what would be the best option for Alfen to communicate this, and we will look in the area of the coming months, whether we're going to.
How are we going to communicate it? Will be then presented also to the market so that everybody has ample time, also to prepare for that.
Okay. Thank you.
Thank you. We'll now take our last question. At the tone, please state your name and company before posing your question. Your line is open. Please go ahead.
Yeah. Thijs Berkelder again, ABN AMRO ODDO BHF. A follow-up on 2023 and your, let's say, prediction numbers in EV charging. You've shown you are capable of producing more than 80,000 charging points per day. And still, as I recall, growing your production capacity capability substantially for the coming years. If you have, let's say, excess capacity now available or next year available, is it logical to assume that you might enter new markets we haven't seen before, such as Turkey, Asia, U.S. or whatever?
Thijs, we're always evaluating all of the market capabilities and where we can best serve. We still see tremendous growth opportunities here in Europe, you know, but where our products can add value, we'll certainly explore and make sure that we're paying attention to those markets, but can't comment on. You know, our focus right now is really still Europe.
Because I missed the nice geographical picture on the countries where you're now selling your product. I was thinking maybe we're missing a big country there. That's not yet to be announced. Okay. Clear. Thanks.
Okay.
Thank you. There are no further questions. I will now hand you back to your host, Marco Roeleveld, for any closing remarks. Thank you.
Okay. Here, Marco. I would like to thank everybody for the attention and all the questions that have been put forward and appreciate also the in-depth interest in what we are doing. I wish you the best for the remaining part of the day and hope to speak to you again at our year results in February. Thank you.