Earnings Call: Q1 2021

May 13, 2021

Turn the call over to Michael Farkas, CEO Brendan Jones, President of Blink Charging. Go ahead, Michael. Good afternoon, everyone. Thank you for joining us. We had a solid start to 2021. 1st quarter revenue grew 72% Compared to the Q1 of 2020, and we continued to aggressively expand the geographic footprint of our chargers. During the quarter, we made tremendous progress with 1597 commercial and residential chargers contracted, sold or deployed And the number of Blink owned charging stations contracted deployed grew more than 3 70% compared to the same period in 2020. Our target locations are high density, high volume venues like hotels, multifamily residentials and healthcare networks. We are also working with a broad range of countries, states and municipalities to strengthen EV infrastructure as more individual drivers As well as Fleet's transition to greener transportation. EV use is gaining traction worldwide. And in the U. S, the transition is being aided by favorable legislation initiatives in the Biden administration. In fact, as many of you know, in early April, The White House published this infrastructure plan with among other initiatives proposes a $174,000,000,000 investment For the electrification of cars and trucks and also proposes to establish grants and incentive programs To build a national network of 500,000 EV charging stations. With these efforts to get more EVs on the road, It's logical that demand will increase for fast, accessible and reliable charging stations to fuel these vehicles. While EVs are currently a relatively small portion of the vehicle market, they represent a rapidly growing segment of the transportation sector. As a leader in the EV industry, we are well positioned to play a key role in the infrastructure build out Necessary to support the anticipated growth in EV Transportation and we are already actively pursuing opportunities at the local, state And federal levels of government. It's important to remember that we are a pioneer in the EV charging space with a great deal of experience in deploying charging stations In locations that are accessible and convenient, while also providing the technology that ensures a fast charge. We are focused on our operator owner model where we enter into long term exclusive contracts With automatic extensions that employ a revenue sharing model in which we receive payment each and every time A vehicle is charged at one of our Blink owned locations. With this structure, we have the potential to generate a valuable recurring revenue stream For many years to come as EV utilization increases. Our property owner partners also benefit from this model Because we take care of the installation and maintenance of Blink owned units, which is often an attractive option for property management companies We have a lot of other responsibilities on their plate. Additionally, in our own and operate approach, we have exclusive long term contracts, Which allow us to deploy charging stations today, but most importantly to add charges to these contracted locations As necessary to meet demand. And that is through long term again, very long term and exclusive contracts. This is a very exciting time to be a leader in the EV charging industry. Even before the recent announcements from the White House, We believe and continue to believe that the transition to EVs represent an opportunity with tremendous potential for our company's growth. As we've noted in previous calls, but think it's important to point out again and again, Bloomberg's NEF electric vehicle outlook, Which looks at the global EV market noted that passenger EV sales increased from $450,000 in 2015 To $2,100,000 in 2019 and are expected to reach over $50,000,000 by 2,040. Bloomberg NEF also expects that more than 50% of new car sales globally will be EVs by 2,040 And projects that the need for charging stations will top 290,000,000 by 2,040. Again, 290,000,000 charging stations needed globally. We're not even in the beginning of the first inning, As to the amount of deployments that are necessary. And by the way, that has a value of over $500,000,000,000 worldwide. The shift to EVs is happening and Blink is poised for significant growth as we play a key role providing the infrastructure to support this transition. To support our growth in January 2021, we completed a successful equity raise of $232,000,000 Significantly strengthening our balance sheet. With a stronger capital structure, we are better positioned to expand Blink owned charging infrastructure, Improve internal systems, operations and technology and to prepare for anticipated exponential growth, Securing new partnerships, acquiring new locations and continuing to seek strategic acquisition opportunities. As a key contributor to the expanding EV landscape, we are continuously looking for opportunities to strategically increase our global assets, While also making EV charging more accessible. As such, we are very excited about this week's announced acquisition of European EV charging operator, BlueCorner and its portfolio of 7,071 charging ports, giving Blink operational control, Complete operational control of Blink Corner and its EV charging assets. The acquisition is part of our broader strategic international expansion plans And provides a significant infrastructure input footprint in Europe. Blue corner chargers are located across Belgium, Luxembourg, the Netherlands And France. EVs enjoy a much harder and quieter market share in Europe. It's heightening the potential for the increased utilization For our EV charging stations. In addition, the historically higher price of fuel in Europe makes driving in EV a much stronger value To facilitate our further expansion in Europe, we've also created Blink Holdings, a new company headquarters in Amsterdam, And we're excited to immediately establish a significant presence in Europe, supporting the international expansion that is fundamental to our growth, And we believe this acquisition will accelerate the success we are already achieving in Europe. Finally, we are excited by the opportunities we are seeing in the marketplace. And during the Q1, we strengthened our capabilities for capitalizing on these opportunities by strategically adding new positions and people To improve our operational strength across the organization, perhaps most notably, we added our new CTO, Harjinder Badi. He is a founder of ChargePoint, one of our biggest competitors, and he is a seasoned renewable and EV charging executive. We'll focus on the aggressive development of the company's product lineup, the technology infrastructure and just bringing up everything within our portfolio up to the next level. Additionally, we made 17 new hires across the organization, including the technology, sales, IT and customer service departments. We are also expanding our facilities in advance of anticipated growth. And at the start of the quarter, we announced the purchase of a 10,000 square foot office in Miami To house our corporate headquarters and to support our current and future growth. Also at the beginning of the Q1, we opened a new Phoenix location, which has already begun making meaningful contributions to our operations. BLINK is off to a strong start In solidly positioned to drive growth. And as we move through the balance of 2021, we have amazing and exciting things ahead of us. And this is a very exciting and transformative time for Blink and we're extremely optimistic about our future and our role in the growth Of Worldwide EV Charging Infrastructure. Now I'll turn the call over to Brendan Jones, President of Blink to discuss some of our recent developments. Go ahead, Brendan. Thanks, Michael. Well, good afternoon, everyone. It is a pleasure to speak with you today. We have been very busy here at BLINK as evidenced by many of the recent deployments and developments within the company. I would like to review some of the highlights. To begin with our latest news, we're very pleased To have acquired Bluecorner and its portfolio of more than 7,000 charging points. This acquisition provides us a Solid foothold to access the European market, a underpenetrated market that has the potential to be a growth area for BLINK As the transition to EVs continues to progress. To provide some additional context, the European EV market It is growing faster than the United States. Sales of plug in electric vehicles in Europe rose 100 and 37% to 1,400,000 vehicles last year, whereas the U. S. Rose 4% to 328,000. These numbers are according to evvolumes.com. The surge in EV adoption will increase demand for EV charging infrastructure. In addition, European regulations are further accelerating widespread EV adoption with regulatory reform that supports 0 Emissions Vehicles. Now we haven't lost focus domestically. We are effectively leveraging EVA infrastructure grants, Incentives and programs across the country with some of the recent deployments including the deployment of 42 charging ports at And 4 Brothers Pizza Inn locations across New York, which was made possible through the Charge Ready program From the New York State Energy Research and Development Authority, otherwise known as NYSERDA and make ready incentives by New York utilities. Additionally, we upgraded 19 1st generation BLINK EV charging stations in Plano, Texas to the company's IQ 200 fast level 2 charging stations in support of the city's commitment to electrify their transportation infrastructure. The deployment of Blink IQ200 charging stations at Native American Youth and Family Centers in Portland, Oregon, which was made possible with funding from the Portland General Electric Drive Charge Funds through the Oregon Clean Fuels Program and an electric mobility grant from Pacific Power Oregon Electric. Also, there was an Ascend through Oregon Clean Fuels program. We also recently added some valuable partnerships, which include but not limited to an agreement With General Motors to offer GM EV customers more seamless access to publicly available blank charging station sites across the U. S. As part of GM's Ultium Charge 360 program. We also signed a reseller agreement with EV Transportation Services, Otherwise known as EVTS to distribute Blynk IQ200M portable EV charger along with its Firefly ESV essential service vehicle. We just engaged in a sponsorship also with the University of Cincinnati's Bear At electric vehicle racing team, this is the university's 4th all electric formula race team and we're really excited about that. We continue to make progress internationally through agreements such as the first installation of a Blynk IQ 100 Charger by the municipality of Pedro Aguaire Sur de in Santiago, Chile to support the municipality's New fleet of Nissan LEAF vehicles. And in addition to that, we signed an agreement to deploy Blink EV charging stations At Fatale Hotel Group locations in Israel. For some context, Fatale is one of Israel's leading hotel companies with luxury Hotels in 14 major tourist locations. As Michael mentioned, we have made a lot of structural improvements to strengthen the company and capitalize On the interest and opportunities we're seeing in the marketplace, these improvements include expanding and improving our sales team, Our service operations team, our product development team. We are also we are now very well positioned to support the anticipated growth Ahead of us. I'd like to now turn this over to our CFO, Michael Rama, to run through some of the specifics results for the quarter. Thank you, Brendan, and good afternoon, everyone. We are off to a solid start in 2021 With total revenue growth of 72 percent to $2,200,000 in the Q1 of 2021 as compared to the Q1 of 2020. This growth was driven by increased product sales as well as increased network fees. Product revenues grew by over 113% in the Q1 of 2021 as compared to the same period of 2020 Related to the robust demand for our commercial and residential chargers, network fees grew 100% as compared to the Q1 of 2020 Related to the increase in charges within our network. The growth in these two areas of our business was offset slightly By a decrease in revenues from charging services for the quarter. Despite the continued reopening of the economy, travel in general is still a bit constrained As the economic as certain pandemic related restrictions remain in place, which impacts EV Traveling. Q1 2021 net loss was $7,400,000 or $0.18 per share, compared to net loss of $3,000,000 or $0.11 Per share in the Q1 of 2020. For the Q1 of 2021, net loss included increases in compensation and operating Expenses related to the onboarding of new employees, primarily in our sales, IT and customer service areas. Specifically, operating expenses for the Q1 of 2021 increased to $7,500,000 from $3,300,000 Primarily driven by significant scaling of our infrastructure and operations as we continue to scale the business to prepare For the anticipated demand for our products and services as EB use grows. Also contributing to the increase in operating Expenses for the Q1 of 2021 compared to the Q1 of 2020 were operating expenses associated with The acquisitions of BlueLA and YUGO stations during the second half of twenty twenty. As of March 31, 2021, We sold or deployed 17,302 chargers, of which 7,191 were on the BLINK network, Which consisted of 4,471 Level 2 publicly accessible commercial chargers, 1441 Level 2 private commercial chargers, 121 DC fast charging publicly accessible chargers, 11 DC fast charging private chargers and 11 47 residential level 2 Blink EV chargers. The remaining are non networks on other networks or international sales or deployments, which consists of 225 Level 2 commercial chargers, 6 DC fast charging chargers, 9,218 residential Level 2 Blink chargers, That 607 sold internationally and 55 deployed internationally. And now a few comments about our liquidity and cash. At March 31, 2021, cash and marketable securities were $232,200,000 Compared to $22,300,000 at December 31, 2020. During the Q1 of 2021, we completed a successful equity raise of $232,000,000 Now I'll turn the call back over to Michael Parcus for some additional remarks and after that, we'll open it up for Q and A. Michael? 2021 has really been a busy year. We are energized and prepared to capitalize on the opportunities we're seeing To grow our role as a key contributor to the establishment expansion of worldwide EV infrastructure, this is an exciting time for our We will take our first one from Gabe Daoud with Cowen. Please go ahead. Your line is open. Thanks. Good afternoon, guys. Could we maybe just start with the Bluecorner acquisition, Obviously expanding the footprint in Europe, pretty attractive price. Could you maybe give us a little bit of background on maybe the process and just maybe Any color around what the business does from a revenue standpoint? And any perspective, I guess, on why Blue corner would be interested in selling at this point in the cycle. Okay. This is Michael Farkas. I'll take the beginning of that and then I'll let Brendan follow-up. Blue Corner and the reason why the company was extremely attractive for us Just because of their base in Europe, not only they have their own network, they have their own hardware, although outsourced production, They have an amazing base of customers throughout Europe and they're constantly growing. For us, it was an amazing opportunity to be able to Integrate Blink Hardware, Blink Network ultimately, and use it to springboard our major push in advance into Europe. Brendan, would you like to follow-up with that? Yes. I think we went through a fairly exhaustive search for opportunities that were based In Europe, we look primarily on the continent as well as Ireland and England as well. Bluecorner popped up as a company that had a great deal of Similarities to Blink. We have a similar model. We both own and operate chargers. They sell chargers. They own and operate their own network And they maintain their own chargers and they have manufacturing agreements to customer manufacturing as well. And they have a good footprint In 4 countries with the ability to expand to other countries throughout Europe. So when we examined this, then the cost of acquisition, We saw this as a unique opportunity to really energize and rapidly expand our presence in Europe. And keep in mind, we're also prepping Europe for relationships in Greece, where we've already made several announcements with our partners over there. And this further looks at Blink and says we are going to be in a national presence. We're now active in Europe, In Greece, in the 4 countries we just outlined, in South America, in the Dominican Republic and other countries and continents to come. Thanks, guys. That's helpful. One other thing I'd like to also add to that. The value proposition For someone having to pay for fuel in Europe versus America, it's so much greater in favor of electric vehicles. And they're just more environmentally conscious today than the American market is. This really allows us to participate in really one of the most Active EV markets in the world, you have countries within the EU, where you see double digit, EV sales today, even more than half the market of EVs. We're now going to be able to enter those marketplaces. It will directly, we believe, impact utilizations tremendously. And people get an understanding what a worldwide portfolio of Charging stations really can amount to. Thanks, Michael. That's helpful. And thanks, Brendan. And so those 7,000 or so ports, are those All owned and operated by Blue Corner? Is there a split on that? And those are all level 2, I'd assume, right? Yes. These are all Level 2 charges. It has a very similar makeup to our unit. Some are privately owned where they were purchased, But the greater majority of them are public chargers, that are accessible to the public and owned and operated by Bluecorner. Got you. Got you. Okay. Thanks, Brendan. And then, a follow-up for me. I know as part of the BlueLA acquisition, you picked up some, ride sharing Cars, which I guess now is kind of showed in the financial separately. Is there how should we think about that like line item moving forward? It was looked like a pretty Decent drag on gross margin in 1Q. Just like do you plan on keeping that over time? Just what happens with that segment over time? Our plan really is to be able to provide charging infrastructure in the streets globally. An opportunity, Rosignelli, to buy the program, which gave us car sharing, EV sharing, as well as infrastructure. In the Los Angeles market, which are planned to operate the cars, run the program, but there are also opportunities globally where We are bringing a local partner who may own and operate the cars through our systems. So we're looking at each market individually. Our focus is really On the EV charging market, but the opportunity really allowed us to be able to Prototype, this service, which would include EV charging, EVs on the road for ride sharing and car sharing, Advertising and also having some communication services as well. So the LA market was something that we could use to Prove the service and product and then to be able to roll it out globally. But our focus is not internally on owning the cars. Got it. Thanks, Michael. And then just finally on the you mentioned advertising and you talked about potential media Is there any timeline that you could talk to where you'd be rolling out something like that? Is it at some point this year? Is that like a 2022 Type of new products, just any thoughts around that? We're hopeful to have something in the streets this year. Got it. Thanks, guys. You're welcome. We will take our next question from Vikram Bagri with Needham and Company. Please go ahead. Your line is open. Good evening, everyone. Just a couple of quick ones for me. I saw that there was a small Decline in charging services revenue. And I was wondering if there is a way to quantify the impact of the pandemic on This revenue stream, if you want to take the utilization pre pandemic and apply it to your larger and bigger asset base right now, Or how should we think about growth going forward? Is there a way you can quantify how pandemic is impacting this line item? Yes, I'll add to that. This is Michael Rama. Yes, the Q1 we saw, obviously, it was a decline Quarter over quarter on the charging station because of the pandemic, but we continuously have seen an increase quarter over quarter since Q2 of an increase going from Q2 of 2020 going forward on the charging station revenues. Utilizations are continuing to increase. We have a different mix of product now in our portfolio. So What's producing at a higher rate, we're starting to really start monetizing. I'm looking at data coming in every day And every day, the charging revenues continuously increase. So we're very optimistic that Charging revenues are increasing and we're starting to see through the pandemic and the increase in utilization. Thanks, Michael. The second question I had was, you mentioned that there were certain one time items in your operating Spencer, I heard new hires at 2 new offices, Miami and Phoenix. How should we think about comp and SG and A? And I was wondering if you can Quantify the impact of acquisition related expenses and if there were any one time year end incentives baked into the numbers In Q1, how should we think about OpEx going forward? Obviously, we continue to we'll have some Related to the Blue Quarter, we'll have some acquisition related expenses. New hires Our part of our strategy, strengthening the IT, strengthening sales, strengthening all the different core Scalable areas to support the growth and anticipated growth. Obviously, salaries are continuing, but one time expenses related Acquisitions, obviously, we had some acquisition related in BLA and as well as the acquisitions from 2020. But Obviously, the bigger one time, we'll see that coming through more so in the Q2 with the closing of the blue corner. Thank you. And just the last one for me. Could you talk about the M and A landscape in Europe? One of the markets, for Since Netherlands, you have the lowest EV to EVSE ratios of about 3. So it seems like it's a pretty fragmented market. There are abundant Junitie, for you to both expand organically and due to EV sales expand through M and A. Could you talk about how many of how many M and A opportunities you're seeing? Are you looking to expand through M and A rapidly in other countries? Could you just talk about the M and A landscape in Europe? Yes. We see some extremely exciting things out there and you are correct. It's extremely fat fragmented. You have a lot of mom and pops that own a charging station in their locations. And we see the ability of us being able to consolidate the markets, not only in the U. S. But globally. Remember, Blink is a consolidation of about 10 companies today. We were guilt on acquisitions. I think we're better equipped than any of our competitors to out there and start buying up our competitors. We've done this before. We've integrated these companies. Tremendous experience in doing so. There are a lot of opportunities in Europe. One of the biggest things that would make it so compelling for us It's how fragmented the industry is while there's a lot of infrastructure out there, but not nearly enough infrastructure that's going to be required in the future. So you may have a location with a unit or 2 and then it may get a little bit more complicated and expensive for some of these property owners who start deploying in those locations. That's where the Blink model is really going to be very helpful in Europe, which is not very prevalent. Us owning and operating these charging stations throughout the continents and we believe it's going to be we're going to have a lot of opportunities on the M and A front. We just started basically. Understood. Thank you very much. That's all I have. We will take our next question from Noel Parks with Tuohy Brothers. Your line is open. Please go ahead. Good afternoon. Hello. Just a couple of things. Going back to the BlueCorner acquisition, you're just talking about greater penetration and A greater perception of value of EVs in Europe. Can you Can you give sort of a ballpark sense of what that means for sort of a payback on incremental investment For units you in time would be deploying in Europe versus in the U. S. Where the penetration and the utilization It's slower. Just kind of a comparison of what makes that more attractive if you can quantify that at all. Okay. There are a lot of factors. Number 1, the cost of our equipment is much lower in Europe than it is in the U. S. The port cost is less than half. We're also looking at each and every one of those ports on an AC side that are twice as Fast as what we have in the U. S. So half the cost of the hardware, we can make twice as much in money in that same period of time. That in its own right, just again, the value proposition is off the charts from us when we're looking at it, U. S. Versus Europe. Again, and utilization is key. So if we're talking about on our hybrid model, at a 10% straight line utilization, Getting paid back on a per quarter basis, less than a year, you would see that in less than half the time. Again, the installation costs still aren't cheap, but it's still even cheaper when you're dealing with 3 phase Installations versus what we do here in the U. S. So the installations are cheaper, the hardware is cheaper and the hardware is actually faster. So when you add all of that together, the and the amount of EVs that are on the road is much greater there than here. We believe that it will be a very, very significant boost to our business in very short order. Great. Thanks. And my second one is, with your new Chief Technology Officer coming on board, very much an industry veteran. Can you just give a sense of maybe what The sort of most important or most urgent initiatives might be sort of tactical things For the near term that would be on his plate and also if there's any sense of, and I know he probably hasn't had a lot of time to I think it's Steve into it, but what some of the more strategic changes or needs might be going forward? Okay. I'm just going to point out a couple and then Brendan will follow-up. But one of the key things, obviously, we're internationalizing the entire company. So internationalizing the network across the board, so you could have one mobile application that can operate all of our charging stations globally And having multi currency, multi language, that's something that we're launching in short order and that's something Arjinda is going to be focused on getting through the process. Arjinda will touch Every single corner of this company. He is, as you know, Seasoned. I was fortunate enough to work with him for quite some time. While he was at ChargePoint, most people don't know this, but our largest Our vendor our main vendor at the time was ChargePoint and we interacted with Harjinder quite often and We're very excited on seeing the things that he's going to bring to the table and Brendan could be a bit more specific. Yes. So thanks, Michael. And I'll be brief because Michael hit the highlights there. But if you look at The changing needs of networks in today's world versus what they were, say, 5 years ago, More feature sets, more integration to the vehicles via 1511.8 standard, the plug and charge standard. More requests from both site hosts on reservation systems, more integration with the utilities On demand response and other models and generally just more feature sets in general. And that's just on the software side. And then on the product side, everything keeps reinventing its side. So we made a decision. We were happy on the path we are in, But what we really wanted at BLINK is accelerated growth to take advantage of what was going on today and then prepare for the future. And that's why we brought him on. So as Michael alluded to, if you think of all the product and technological underpinnings that a leading edge EV infrastructure company needs to do to keep up and surpass the competition. That is why we brought Harjinda on and that is his mission statement. And we've already laid that out and I'm happy to report we're already beginning the work. Terrific. Thanks a lot. It appears we have no Further questions at this time, I will now turn the program back over to management for any additional or closing remarks. Thank you everyone for joining us. This is an exciting time for our company and we remain focused on expanding our footprint, growing our customer base And establishing new partnerships. We look forward to speaking with you again next quarter. This does conclude today's program. Thank you for your participation. You may disconnect.