Su`re, thanks, Chris. It's obviously good to see you again, so just in the abundance of caution and accuracy, technically, I will become the CEO in two weeks, so just to set the record straight. But so from a background perspective, I've been with Blink for about four and a half years. I came into the company just after they had closed out 2019, and the company's full-year revenue was $2.7 million. And we can talk more about that later on as to where we are today. But my whole career has been spent in the automotive industry, so prior to Blink, I was at J.D. Power for almost 15 years in a variety of roles. And what prompted me to leave J.D. Power and go to Blink, so a pretty well-established company in J.D.
Power, and then go to this little tiny company, Blink. Almost every auto manufacturer was a customer of J.D. Power. And regardless of what we were going in to talk to them about, the conversation always came back around to electrification. So, we could be talking to them about product development, and obviously, they would want to talk about electrification. But if we went in and were talking about customer experience, or we were talking about training, or we were talking about different data and analytics pieces, they would always bring the conversation back to electrification. So, I kind of said, "Man, there's something to this." And I started my career with Toyota right out of college. So, I was indoctrinated into the automotive industry at that point. Spent six years with a consumer electronics company.
So, you know, when you think about the charging infrastructure business, it's this marriage of almost a consumer electronics-type product with the automotive industry. So, I think those two things came together fairly nicely.
Okay. So, if we start at the highest level then, kind of bridging off your experience there, how do you think about EV adoption, short-term and long-term? And how does that play into how investors should think about Blink?
Yeah, thanks. So, first of all, you know, there's a lot of noise in the market. There's media distractions, but then there's the reality of what's happening from a sales perspective and things like that. So, I'll put that aside for the moment. The way that Blink thinks about the market is that over the medium to long term, there absolutely will be this transition to electrification in transportation. So, it will span both passenger cars, it'll span medium-duty vehicles, and it'll span heavy-duty vehicles. So, the end game is the same. And the addressable market for Blink and others in the industry is very, very bullish for decades to come, literally. But obviously, we're going through some turmoil at the moment. And it's really, we think it's short-lived.
So, when you look at the growth of Blink from, like I had mentioned, 2019 being $2.7 million in revenue, we fast-forward to 2023, and we hit a high of $140 million. So, it's a pretty good growth trajectory in a pretty short period of time. 2024 was a tougher year. But we think, again, once things settle down a little bit, if you look at where the industry is expected to be from a battery electric vehicle standpoint, almost every single analyst has battery electric vehicles growing in share in 2025, even taking into account the assumption that the $7,500 EV tax credit's going to go away. So, to us, that's a bullish story.
Okay. And then can you talk about, you know, one thing that's unique about you guys, about Blink, is you have a multi-pronged strategy. You're not just selling equipment, you're not just an owner-operator, you're sort of marrying both of those kind of go-to-markets. So, kind of talk about the four ways that you guys generate revenue with your customers.
Yeah, will do. So, you know, in Blink's DNA is this perspective that we want to be flexible and that we want to be able to address whatever the customer's goals and objectives are. So, that manifests itself in two ways. There are a set of customers that all they want to do is purchase equipment. So, think of fleets. The predominant business model among fleets and, again, car dealer infrastructure, things like that, is that they're going to buy the equipment. So, we want to be there to address that. So, a great example at Blink is our single largest customer is a fleet customer, and that's the United States Postal Service. So, the Postal Service is buying equipment. That's what they do.
On the other end of the spectrum, there is a very robust market for customers that want a company like Blink to come in and own and operate charging stations and manage them. So, we are able to address that entire market. So, the TAM for us, we think, is quite large. So, currently, 75% of our revenue comes from selling charging stations, 25% comes from what we call services, which is software subscription, it's owning and operating charging stations, it's selling electricity, things like that.
So, what drives that decision? And I guess, has the market been shifting? What are you seeing from customers over time? And what would drive that decision from someone that says, "I want you to own and operate this bank of chargers on my property"?
Yeah. So, when we talk about public infrastructure, the industry's gone through a couple of different cycles. And early on, as companies or as property owners were thinking about installing EV infrastructure, they were buying it. They were running out, they were buying charging stations, they were installing it. But in the life cycle of a lot of these companies, they're kind of on their second charger now. So, the first charger might have been in the ground for 10 years, perhaps it doesn't no longer operate, or it's just old technology, and they want to replace it. And what we're seeing is that a lot of those property owners are coming to us and saying, "Hey, I don't want to buy this again, but I would really like it for you to come in and own and operate." So, from an external to internal perspective, we're seeing that.
But then also from an internal Blink perspective, our goals and objectives are to increase that share of revenue from 25% services and marching that up to, call it in the next five to six years, becoming two-thirds of our revenue or more.
When you say services, that's not selling the chargers? Or is there more to it than?
Owning and operating, software network fees, other programs like maintenance programs and extended warranties, stuff like that. But the predominant makeup of that are two things. It's the software subscription fees, and it is revenue from electricity.
Okay. And you sort of touched on it, but can you kind of go, like, when we talk about consumer electrification versus fleet, is it right that it's just a pure TCO argument and it doesn't matter who's in the White House? And the consumer side of the world is a little more sensitive to subsidies and things like that? Or do I have that wrong? What's the right way to think about where you're seeing momentum or where you're not seeing momentum?
Yeah. So, on the, you know, it doesn't matter who's in the White House. I won't touch that necessarily. But, you know, it always matters, I think, to some degree, right? Because there's, you know, there's different programs that are out on the market. There's also things like CAFE requirements and things like that. Are they going to roll them back? Are they going to keep them where they are? But I would say on balance, when you look at corporate fleets, they are continuing to press towards electrification. We have no indications whatsoever that just because there's been an administration change that they're changing course. So, that's certainly a positive. The second part of your question was in the public.
The public space.
Yeah.
Yeah. I guess, are you more bullish on one side of the market versus the other right now? Has that changed over time? What's the right way to think about it?
Yeah. I would say that we are more oriented and bullish towards the public side of the market, not at the expense of fleet or private, but you know, we're just seeing that, again, that public addressable market's huge, and we're seeing a lot of activity there, so you know, the number one reason why someone does not purchase an electric vehicle is no longer range anxiety. It is lack of infrastructure, visible infrastructure in the market. It's that, you know, "Um, do I have someplace that I can charge that's convenient?" And you know, every day that goes by, that gets better and better and better. And that's why one of the reasons why Blink embraces level two charging stations, because the investment is so much less expensive than DC fast charging, and you can get that infrastructure into the ground much, much, much more quickly.
Now, that said, I will caveat it with one thing. The company strategy has pivoted slightly in that we are very bullish on DC fast charging owned/operated. So, now we actually own 460 publicly facing DC fast chargers, which is up dramatically from even a couple of years ago.
Okay. And does that mean you own that customer, customer uses your app? Or like, how does it sort of, I guess, well, let's start even before that. How do you know where to put the DC charger? How do you know when not to put a DC charger versus when to put an AC charger? How do you kind of.
Yeah.
Yeah.
So, first of all, as the industry was evolving early on, and I think there's a few people in the industry in here, it was very much a flag-planting mentality. So, the industry was so euphoric over where we were headed that it felt a little bit like we could put a charging station anywhere and it was going to get used. Well, guess what? Reality caught up to us, and that's not the case. And guess what? Like every other industry, you need analytics behind that in order to determine that, right? In order to determine where the ROI is. So, if you look at a company, if you look at Blink, we have evolved tremendously. And in the last two years, our data and analytics capabilities have come along dramatically. And we now have a tremendous team that's all they do.
So, when you look at the volume of data that Blink has in order to assess different addresses and property types, we're able to pretty accurately pinpoint where we're going to see an ROI on a charging station. Now, in terms of the two different types, right? Level 2, AC versus DC, and where do you put either of them? So, this is really important because 90% of all charging events happen on Level 2 charging stations. Only 10% happen on DC fast charging. But the share of conversation about EV infrastructure is the inverse of that. 90% of the conversation in the media and everything else is on DC fast charging, and 10% is on AC Level 2. So, it's a little wackadoodle. But what you really need to look for is what is the property type and the consumer behavior at that property?
So, an example, if I am partnering with a C-store gas station chain, that is absolutely a DC Fast Charging application. If I'm a consumer, I'm not going to spend four hours at a gas station. I don't know anybody that would, right? So, that is a DC Fast Charging application. On the flip side, when we look at AC Level 2, that's much more of a multifamily apartment building, hospitality, hotel, amusement parks are actually, believe it or not, a great application for Level 2 charging stations. So, one of our best performing sites is the San Diego Zoo. And all we have at the San Diego Zoo are Level 2 charging stations. And they are literally never not used. It's amazing. So, it depends on dwell time. How much time is somebody spending there?
Because the thing to remember is, let's take the zoo, let's continue with the zoo example. If I were to put a DC fast charger at a zoo, and I were to hook my car up to it, and I were to go into the park with my kids, I would have to turn around and come right back out 20 minutes later and unhook it and move it. That's not a good customer experience. But if I'm going to be at the zoo for four hours, I plug into a level two, and my car is probably charged fully by the time I get out.
So, can you talk about then, you know, the San Diego Zoo? I haven't been there in a while, but you've got your Blink chargers. Are they calling you saying, "Hey, these are full all the time, let's install some more chargers"? Or are you calling them saying, "Hey, we're seeing high utilization at these chargers, we should put in more owned and operated chargers at this station"? Like, what's the push-pull like? Because when the operator, when the person who owns the land sees this utilization, do they want to switch the conversation? Or what's the right way to think about it?
Yeah, a lot of it depends on the motivation of the property owner, right? So, we see both. I would say, if the property owner is very interested in revenue share and earning income from the charging station, they will push us for that. But our team, you know, we are looking at utilization reports constantly. So, we are arming our salespeople to go out and say, "Hey, we have four here at the San Diego Zoo, let's put in two more," or whatever the right number is to expand the infrastructure. So, it goes both ways. It's a push-pull.
Okay. And then lastly, just on the industry high level, NACS and Tesla, kind of what happens as more drivers get access to the Tesla Supercharger network? What happens as those drivers who are already seeing congestion start to look for other ways to charge? You know, you guys have NACS connected chargers. Like, how does that all come together? Or is there any playbook?
Yeah. Oh, yeah, there's definitely a playbook. So, first of all, Blink has been deploying J1772 Level 2 and CCS DC fast chargers for years. The number one customer for our charging stations are Tesla drivers. No, so obviously they're connecting through NACS. They're doing it with an adapter. So, first of all, the Tesla drivers are already behaving this way. I mean, I have a Tesla Model Y. I have two adapters in my car. I have a Level 2 adapter, and I've also got a Tesla to CCS adapter if I need to go to a CCS charging station. So, some of that behavior is a bit ingrained. Now, you know, we think that'll continue because there's obviously a large installed base out there. But on balance, we think that this is a very positive development for the industry, for Blink. Number one, it simplifies our supply chain.
We don't have to worry about, do we put a NACS, do we put a CCS, you know, what's the strategy? So, we will standardize when we think it's the right time on NACS and deploy NACS. However, there's still a lot of new battery electric vehicles hitting the market that still have CCS. So, it's a little bit of a balance. There's going to be a transitionary period. You know, unfortunately, consumers are going to be playing with adapters here and there. But I think that once they embrace that a little bit, it's really not that hard to do.
Okay. Okay. And then, you know, under the founder, before you got there or maybe towards the tail end of it, Blink was very acquisitive. Can you kind of talk about the acquisitions you made, the acquisitions you're divesting, sort of how that affects the OpEx line, things like that?
Sure, sure. So, one of my favorite topics as well. So, you know, from, call it 2020 through 2024, probably, Blink acquired about six different companies. So, you know, Chris is right, we are acquisitive kind of by nature. We haven't really divested anything. What we've done is focus the company on the core more. So, a couple of examples, we had a very, very small charging operation in Israel that we divested. We were invested with a partner in Greece. You know, we're in the process of probably unwinding that because they are just, they're too small for us. And we want to focus on our core markets, which are North America and Europe. So, then with that, we would like to, we haven't bought a company in a while. We would like to continue to do that.
But it has to, you know, we have to be very, very focused on what type of company we're acquiring. And some of our criteria are, you know, it's got to be a company that the vast majority of their revenue comes from subscription-type services, so that high-margin recurring revenue. And then secondly, they need to be accretive to EBITDA for Blink. So, they have to be accretive to bottom line for us.
Okay. And you touched on the U.S. and Europe. Can you talk about how being a global player informs? Like, what have you learned from being in Europe where EV adoption is further ahead than the United States and Level 2, Level 3, how things kind of played out there? Are there lessons you can take and apply to the U.S., or is it not that easy?
Yeah, no, there's a couple actually. So, one of the interesting ones is, for instance, the notion of government support for purchasing a car. You know, Europe was very aggressive, like the U.S.'s $7,500 EV tax credit. Europe was very aggressive in terms of subsidizing EV purchases. They backed off of that. They reduced those significantly. And in some countries, they eliminated them. So, Europe went through this, you know, this, hey, EV sales were on fire. They took off the subsidies. EV sales dipped, but then they came back again. So, that's why when we talk about the U.S. market and the removal of that $7,500 EV tax credit, we're pretty confident it's going to follow that same pattern. So, if you look at the fourth quarter of 2024 and you look at automakers reporting sales, they were really pretty good.
And it was battery electric vehicles that drove that growth. And the share was up. Now, I think, and we think at Blink, that the first quarter may dip a bit, but that once the automakers adjust their incentive programs to accommodate for that $7,500, that the market's going to recover. And actually, again, share will be up in 2025 versus 2024.
Okay.
So, that's one example of what we've learned. But the other thing we've learned is, you know, obviously siting of charging stations and, you know, the utilization aspect of things and.
Okay. And then as part of the acquisitions, or correct me if I'm wrong, was the Bowie, Maryland facility part of that? Did that come with the acquisition?
Yes.
What have you learned there? And kind of, I know I was there when you guys had the unveiling of the opening of the second facility or the larger facility. Kind of what's going on on the ground in Bowie now? Kind of what are the benefits from being vertically integrated?
Yeah. So, I get asked like, why did you headquarter in Bowie, Maryland, right? Interesting question. So, when we were going through our largest acquisition back in 2021, I think, Vitalie, I think that's correct, 2021, we acquired a company called SemaConnect. And they manufactured charging stations. And they had a lot of great, made a great customer base. They did not own and operate. They sold. But what we predominantly purchased them for was the manufacturing capability. And they had two things that were really advantageous. One is they had base manufacturing capabilities in India. And the second was that they had a production facility in the United States in order to meet Buy America compliance on EV charging stations. So, that facility was already established in Bowie. We had the workforce there. They were trained.
And so, we felt, as we were looking for a new headquarters out of Miami, that it made sense to, you know, to establish it in Bowie around that production facility. So, what we wound up doing is opening a 30,000 sq ft warehouse, new line of production. Our total production capacity on Level 2 right now is 50,000 units a year. And we could actually go above and beyond that. And then we're actually in about two weeks going to open a new headquarters building right across the street from that production facility.
Okay. So, we kind of hit on the areas of revenue and things like that. If we tie it back to the model, you know, where should investors, I guess, how are you positioning for 2025 and beyond? You know, is it equipment sales? Is it software? Like, what's, you know, kind of how are you positioning in those different buckets?
Yeah. So, I think.
Equipment, can you go between AC and DC as well?
Yeah. So, when we talk about investors and, you know, why, at the end of the day, why should somebody invest in Blink? And I can tell you that there's a couple of things. So, first of all, we often talk about this among the management team, which is when your stock price is at $1.50, what do you do? And what you do is you operate your way out of it. There's no silver bullet. There's no magic. It is about growing the top line. It's about controlling expenses. It's about becoming profitable and cash flow positive. So, that is the absolute focus of the company right now. If you look at our operating results from the third quarter, our most recent quarter that we announced, our operating expenses were down 40%. Our cash burn was down by 50%.
We've done a good job of cost containment, cost cutting, things like that. There's always more around the edges. But then, but really what we need is that top line to continue. And we need that top line growth to drive the business. After all, we're a growth company. I mean, that's who we are. So, when we look at 2025, the first thing you will see is a higher mix of our total revenue being that services revenue. So, predominantly driven by owner-operator and by electricity sales. Now, if you look at our third quarter, none of us were happy with our third quarter performance at the company. The one bright spot in the third quarter was the services revenue. So, while product sales were down, and that's what drove the decline, the services side of the revenue was actually up by 30%.
We're going to continue to see that type of growth on the services side. The issue that we have is that it's just not big enough yet. We're going to drive that services revenue so that it becomes a meaningful percentage of the revenue. Again, where we're at 75% product sales, 25% services, we kind of want to flip that script over time. Now, it's going to take time to get there, but the focus is there.
And can you talk about, you talked about product sales being down in 2024. Can you talk about why 2023 was such a difficult comp? I mean, it was a great year.
Yeah.
But what was unique about the people you were selling into?
Yeah. So, it really came down to one thing. You know, we have several people at Blink that have automotive backgrounds and had very, very good relationships with the automotive OEMs. So, we were able, we did a hell of a job in creating partnerships with the OEMs where we were added to the approved products lists for the dealers to build out their infrastructure. So, you take, you know, the Fords and the GMs and, you know, the list kind of goes on and on and on in terms of the automakers that we were partnered with. We did a tremendous job selling hardware into that space. So, those programs were largely built out going into 2024. And so, that was where the softness came, right?
So, we were tasked with refilling that pipeline, which we actually did a pretty good job when you look at how sizable that business was for us. But that's what drove the comp, the tough comp.
And can you talk about how should investors think about the margins on equipment sales and then software? And then how do you drive the '75, '25 flip without, is it selling more equipment? Is it putting your software in other people's equipment? Like, how do you kind of do that?
Yeah. So, from a margin perspective, Blink is running about mid-30s% in terms of gross margin. And we have among the highest gross margins in the industry. So, we think that'll continue. One of the reasons for that is that we do manufacture our own Level 2 equipment. We sell a lot of L2 chargers. So, the margins are pretty robust there. As we go forward, the growth is not so much us putting our network on other people's chargers. It's more internal. It's more that owner-operator. So, pushing more into DC fast charging, finding the right sites, and quite frankly, being much smarter about pricing strategies. So, for instance, we're partnered with a company called Stable Auto. And what they do is they analyze an EV charging network and right down to the individual site level, and they look at demand and supply and utilization.
And they also look at electricity rates. So, for instance, where I have lived and no longer live, but in Southern California, there's four different electricity tiers during the day. So, you know, between 4:00 P.M. and 9:00 P.M., electricity is very expensive. So, you want to be able to adjust pricing for that. So, those are the things. And, by the way, that incorporates AI and some other really cool tools. And, you know, so we're getting smarter from a pricing perspective too, to help, you know, sustain and hopefully improve margin.
So, can you, when I first started looking at this space, I think it was December 2021, the bear case was gross margins on Level 2 because of commoditization. But that actually hasn't come to play at all. You still have high gross margins in your Level 2 equipment. It's just been that EV adoption was slower than expected? Or was there a third factor?
I think it's actually slightly, it's a great point. What we have seen is in the commercial space for Blink, we have not seen margin erosion. Where the most margin erosion has happened and where Blink doesn't really play is in the residential market.
Okay.
So, if you are selling residential charging stations, you know, through the normal big online retailers, that's a tough go. You know, that's a tough go largely because of Chinese entrants coming in and selling really, really cheap products from overseas. And, you know, but not so much on the commercial side where there's value add in terms of the software networks that power the charging stations. So, it's a total solution. It's not just the piece of hardware. It's the network that runs the entire thing.
Okay. And you gave us the mid to high 30s number, but, you know, you don't have to give us a number around it, but you can say, how should we think about higher or lower AC equipment, DC equipment, software? Like, what's owner-operator? Like, where is the juiciest part of the margin curve? And like, what's the right way to think about you growing that part of the business?
Yeah. So, the juiciest part of the margin curve on the product sales side is Level 2. But on the owner-operator side, it can actually be DC. It's a little bit counterintuitive. But the reason for it is on the DC side is if I put a fast DC fast charger in the right spot, I can generate a lot of throughput. And if I manage pricing correctly, your margins can be quite good. So, in terms of really driving some top line revenue, but also having some really nice margins, it's probably on the DC side. However, with one caveat, that being you have to watch what are called demand fees. Because that's this little secret on the DC fast charging side is that if you don't have scale, you're hit with demand fees and your electricity costs can really skyrocket.
But, you know, that's where site selection and putting the right number of chargers in the right space in the right place is really important.
Okay. And then can we just, on the software side, just so I have it right, it's software that runs the Level 2 chargers that you sold.
Or DC.
That you sold to a third party?
Mm-hmm.
And then that revenue, like, what is the software doing for them? Is it reservations? Is it load management?
Oh, yeah.
Like, what is it doing for that value?
The way we price it, I'll start with the way we price and then what it does. We price software on a per port fee. The customer pays a fee with each individual port that is at their property. What the network enables is, first of all, it enables management of the charging stations. I can limit access. I can keep them completely open, or I can limit access to a defined group of people. I can monitor the charging station in terms of is it being used, is it being not used. I can look at things like how much electricity is being dispensed, how much revenue am I generating if it's a revenue-generating charging station. If I'm a fleet, I can manage my fleet through the network application. You know, whole host of things, really.
There's sustainability reporting that comes out of it, which is important to a lot of clients. But, you know, the network has a lot of capability. But the final thing it does is, from a public perspective, it enables payment. So, the network is, you know, if somebody walks up to a charging station and uses our mobile app, uses an RFID card or taps a credit card, that all goes through the network.
Okay. We have about 10 minutes left. Is there any questions from the room?
Okay.
I'm curious, what's the, if I buy a charging station for new guys or whatever, what's the payback on that for me if I were going to operate? I mean, do I get my money back in a year? Do I get my money back in two years?
100% dependent on where it's going. If it's going at a very high traffic location, you can have a payback in 18 months. If.
Is that DC or AC?
No, no, AC. I'm sorry. I'm talking AC. Now, Level 2 AC. You know, but if it's not, you know, it could be quite a bit longer than that. So, you know, again, it depends on traffic.
So, if I look at that as a business itself, like, not a great business. I mean, that's not a business I'm looking to sort of jump into. If I've got 18 months payback on the machinery at best, right?
I mean, we think it's a great business, but.
No, I understand, but I'm just sort of, I mean, at what point does it really sort of take off for these guys?
I mean, I think you have to look at, you know, where is EV penetration going? And, you know, again, 7.5-8% in 2024, probably 9.5-11% in 2025. You know, it can obviously be shorter than that. If you have subsidies attached to them, there's lots of utility rebates out there. There are charging stations we put in the ground that don't cost us anything, and our payback is instant. So, you know, those programs are around quite a bit coast to coast. I would just call that on average.
So, if we talk about, we've hit on revenue, gross margins, Blink OpEx, you know, how do we frame fixed versus variable to kind of see where, and then kind of you can loop in how you get to adjust to be a bit positive below that.
Yeah. So, from a fixed perspective, you know, there is a core set of expenses that are required to run this business. Things like, you know, Amazon Web Services and things like that that the network sits on. So, you know, those are difficult to, you know, to pull back on. So, then it becomes really the focus becomes on the variable side. You know, we've, and so there's a couple of different things that we have focused on in our cost reduction exercises. We started with going out to our leaders in the company and evaluating every single vendor that we do business with. And that's what we would call the low-hanging fruit and saying, how can we, do we, number one, do we need the service? Or if we do, number two, how can we get cost concessions on that?
The company really did a very, very good job on what I would call wave one. Then wave two, we've already announced, and that was, you know, we did, we announced a 14% reduction in compensation expense. You know, so we feel like the company's, you know, really kind of right-sized where we are right now. There's always more you can pick off around the edges. At this point, I think with our cost structure, it's about, again, driving that top line revenue growth, maintaining our margins while holding the expense structure where it is.
Okay. So, if we think about 2025, sort of, you know, what gets you most excited and what kind of keeps you up at night into this year?
Yeah. So, I would say number one is what gets me most excited is that the election's behind us and that, you know, a lot of that uncertainty is gone and we can kind of go about business as usual. So, we saw a lot of customers kind of holding back on purchases to see where the election was going to go. So, one, that's a good thing. Secondly, you know, we're just starting to see more visibility in the pipeline. We're starting to see more strength as we go into 2025. So, I'm optimistic and even just, again, with where the analysts are pegging battery electric vehicle sales, it feels like that the year is setting up well. What keeps me up at night?
You know, what keeps me up at night is simply getting the company to profitability, to cash flow positive, you know, but that's a task that, you know, we have to meet and we got to get there.
Okay. Anything else from the room? Okay. Well, Mike, thanks for your time.
Thanks, Chris. Yeah, good to see you. Thanks.