Good afternoon, welcome to the first day of J.P. Morgan's Energy Power Renewables Conference. My name is Bill Peterson, the U.S. Clean Tech and Metals & Mining Analyst. Really pleased to have a team from Blink Charging here. Michael Rama, the CFO, and Michael Battaglia, the Chief Revenue Officer. We're gonna do the straight fireside chat, you know, if you have any questions, please let us know. Thanks for joining and supporting the conference.
Thank you.
Maybe just as we start, and I don't know, either one of you can take it, but can. For those who are less familiar with the story, maybe you can, you know, what is Blink's position in the charging market? You know, how do you see the key differentiators in terms of your hardware and software offering? Obviously, you can go into detail as we move forward.
Yeah. Thanks, Bill. I'll take that. Blink was founded in 2009. We're a U.S.-based company, headquartered in Miami Beach, Florida. We have three facilities or three offices in the U.S. We have three in Europe, one in Tel Aviv, Israel, two facilities in India that primarily handle hardware development, software development, as well as manufacturing. The company is one of the only vertically integrated EV charging companies in the industry, and what that means is we design, develop, manufacture our own hardware, we install it, we maintain it, and we operate the cloud-based network that controls all of those chargers, and that is our own network. Second differentiator to Blink is the way we go to market. Where some companies only sell hardware, some companies only own and operate, we actually do both.
We go to market with four core business models, one being, we sell hardware, we offer charging as a service, and then we have two owner-operator models where Blink owns and operates the charging stations. One of them is what we call a turnkey model, which is where we fund 100% of the infrastructure as well as the equipment at that location. Another is what we call a hybrid, which is a co-investment, where the property runs the electrical infrastructure to the parking spot, and we install, own, and operate the charger.
Great. Thanks for the overview. Before kinda getting into, you know, the core business and, you know, the strategy around hybrid versus all these things, and we'll talk about a number of things, but obviously the big news in the industry over the past, you know, several weeks has been the decision by some OEMs to move to the Tesla NACS charger, as well as access, you know, or eventually get access to the Supercharging Network. I guess, you know, how does Blink view this news, first of all? How much of a threat is it, if any, and, like, how should investors think about-
Yeah.
... you know, this threat.
Yeah. For Blink, we don't view it as a threat at all. In fact, we view it as an opportunity, and I'll explain specifically why. The majority of our business is Level 2, so we definitely have a presence in DC. It's growing, but the majority of our business is Level 2. When you look at our charging activity or utilization activity from the company's inception until now, our number one customer on our Level 2 charging stations are Tesla drivers. Tesla drivers are using an adapter that comes with the car in order to charge on a J1772 charging station. Now transition over to DC. Up until now, we really haven't had that Tesla customer utilizing our DC fast chargers because they've been using the Supercharger network.
What this enables us to do now is open up, provide a NACS connector on the DC hardware that we'll be offering, and then it opens up a whole population of drivers that we really haven't seen. For us, we view it as a net positive, and we're excited about it.
One of the concerns broadly has been that, you know, with Tesla's charging network being kind of a, that isn't their core business, that they will have more money to invest and sort of branch out and capture more market share in the industry. I mean, why wouldn't that be the case? I guess maybe you can tie that into the broader growth trajectory and opportunities as you know, for the charging network.
Yeah. One of the things to keep in mind, and, you know, if you look at data from McKinsey, from PwC, other research houses, 90% of all the kilowatt hours that are gonna be dispensed are gonna be through Level 2 chargers. Only about 10%-15% are gonna be dispensed through DC fast. That's number one. We are very focused, again, heavily skewed towards Level 2. Now, that said, when we look at the DC market, there's absolutely no way that Tesla can build out their DC fast infrastructure to service every single OEM that's gonna fall in line. You know, we have GM, we have Ford, we have Rivian, we have Tesla themselves.
If anybody here owns a Tesla or that's listening, and you own a Tesla, you know that if you go to a supercharging station, there are many instances where there's already a line, right? The ecosystem is going to need to be built out with companies more than just Tesla, and it will be companies like Blink and others.
Yeah, that makes sense. Let's talk about the, I guess, the strategy and, you know, you guys really kinda span across, you know, owner, operator, and selling, you know, selling the hardware and software. I guess, and then, and more you're also vertically integrated. You have a lot of things in your portfolio that stands out relative to other people. I guess, how should we think about the mix of your revenue, across the various buckets that you see it, maybe in the near term, but even longer term, three to five years out?
Yeah. We'll probably both comment on this a little bit. We'll start with overall company revenue. Still, about 80% of our revenue comes from selling charging stations and 20% from services. Services can mean electricity sales, it can mean software subscriptions, things like that. That's on a global basis. If we look at the split between the U.S. and rest of world, we're more heavily tilted towards hardware sales in the U.S. versus, let's say, Europe. In Europe, their revenue is far more tilted towards electricity. What we see going forward is that we want to continue to focus on the owner/operator model in the U.S.
We actually wanna elevate that mix on the owner/operator side. In Europe, we want to maintain what they're doing on the owner/operator side, also add to it more hardware sales. To bring kind of both entities up to sort of an equilibrium.
The strategy is really giving the customer the options, right? Flexibility. We don't want a customer to come in and say, "Oh, I wanna buy something," and we're only a owner-operator, or vice versa. We wanna give flexibility, optionality. Property owners have flexibility and options in there, where they wanna deploy. We wanna be able to provide that flexibility, and technically, don't wanna turn down a customer for any type of infrastructure.
Just building on that, there are some channels that they only want one or the other. As an example, we're very strong in automotive with car dealers that are meeting the requirements from their OEMs. That's 100% a hardware sale. There is no owner-operator there. On the other hand, when you're working with shopping centers, they're almost exclusively wanting own operate. That's where the flexibility of Blink comes into play, where depending on the channel, we can react, and we can provide that solution pretty quickly.
You made an acquisition last year, and again, so now you actually have the ability to manufacture these things. How has that helped with the customer acquisition process? You know, maybe we can just ask it even now, like, how does that, you know, impact your cost structure or margin structure?
You want to get it?
I'll start.
Go ahead.
Yeah, yeah. The largest acquisition we did was of SemaConnect last year, and that was a very complimentary acquisition. We were very strong in automotive; they were very strong in multifamily. We put those two things together, now we're strong in both. Obviously, we also picked up the manufacturing capability, so one of the things that's important to know about Blink is that a lot of manufacturing of the components happens over in India, gets shipped over to our facility in Bowie, Maryland. The charging stations, L2, are assembled in Bowie, and we are Buy America compliant today, as well as for the standard next year for 55%. We're already there.
The margin side?
On the margin side, you know, we're seeing. You know, we're still continually seeing the expansion of the margins. You know, one of the flexibilities is by having the owner-operator, we're seeing the margin expansion on the energy sales. Especially when we're manufacturing the chargers themselves, we'll probably reduce the cost by about 1/3 . Our margins, just by doing the manufacturing the units internally, our gross margins will increase as a result instead of using contract manufactured units.
Coming back, you know, to demand, I guess, how much is related to, I guess, energy sales from Level 2? You know, do you still see the skew towards Level 2, or like, when does fast chargers really start to move the needle and be a bigger part of the mix?
We're gonna continue to kind of, you know, go for this mantra, right? Which we believe in strongly, that, you know, somewhere in the neighborhood of 90% of all kilowatt hours are gonna be dispersed through L2. What's interesting about it is that's the forecast. We believe in that forecast, yet all the media attention and all the discussion happens in the inverse, right? Everybody wants to talk about DC. There are reasons for that, load on the grid, transformer availability, all of those things, right? Yeah, we get that. People are gonna charge at home. I think one statistic is that 70% of all Americans live in a multifamily facility, right, dwelling.
Those folks generally don't have their own parking spot with their own charging station gonna be available. We're gonna install, and we are installing sort of semi-public charging stations, right, within, let's say, that multifamily unit that all of the tenants can share and utilize when they need it. That's gonna happen. Workplace charging is gonna happen. I arrive in the morning for work, I plug in. By the end of the day, I'm charged, and I'm driving home. Where you're gonna see DC fast charging is really in highway applications, which is why the NEVI program is targeting those, right? Within 1 mi off designated freeway exits so that people can travel interstate, long distances and not change their current behavior.
Let's actually pivot to that, so policy support, and maybe we can talk about NEVI, and there's maybe some other benefits. You know, how do you see the current status? We've been hearing that there's generally delay. When does this unlock, and what does the NEVI program mean for Blink?
Yeah. First of all, we love the NEVI program. We're looking forward to it. you know, it's not every day that somebody shows up and says they're gonna fund 80% of your project, so we're certainly looking forward to it. What we have seen is a little bit slow. There are a few states that have already issued RFPs. We've responded to those RFPs, and more are coming. You know, we are gonna be, as a company, we're gonna be selective about where we, where we bid, on these locations. We're gonna be looking at, locations that we think are gonna have a ROI, that meet our criteria, and we're not gonna, we're not gonna veer off that.
For us, we're looking forward to it, but we're gonna do it in a very smart way.
Yeah. You know, last year's pre-inflationary environment, we've seen some companies be able to pass through some increased pricing. I think Europe generally looks more competitive, but I guess, is there further room? How should we think about pricing? I guess in the context, too, that a lot of the fear in the industry is that hardware is gonna be commoditized. How should we think about pricing trends here in the near term and even longer term on your, on your sales?
Yeah. When I get that question, I usually think about it in terms of margin enhancement, how can we maintain or improve margins? For us, there's really three levers we can pull. Michael mentioned one of them, which is cost of goods and manufacturing our own equipment in order to stay, you know, very, very competitive. The second is pricing power on network services. For every charging station that's connected to our cloud-based network, there's a monthly fee attached to that, and we think there's pricing power there. We're gonna take a price increase here pretty soon. Then the third lever is obviously electricity sales. For Blink, again.
As we can put the right charging station in the right place at the right time, make sure that we have a clear ROI on that those electricity sales are recurring high-margin revenue. Even if the hardware side of the business gets commoditized or there's price pressure there, we think we can more than make up for it, especially on the owner-operator model on the electricity side.
Especially as we see utilization rates go up, right? As we see utilization rates go up, that will automatically, you know, our costs on our kilowatt costs are gonna be maintained, but we'll see an increase in margins on the kilowatts as we're selling them and the increase in utilization.
Let's pause for a second, see if anybody has any questions. Wait for the microphone, please. Thanks.
Minutes-
Wait, wait. Hold, hold.
Minutes versus a per kilowatt basis for charges, how are you seeing that from a trend on vehicles becoming faster and faster to charge and commoditizing the power off of that play? Does that make sense?
Yeah. Are you looking for the way we charge for the-
Yep. I know that most of your-
Time-based versus kilowatt-hour basis?
Yep. Most of your revenue right now is coming from, Level 2, which almost is immaterial at that point. On your screen here, you have a Level 3 charger. How does that play into fact when you have, time-based versus per kilowatt and what the vehicles can accept?
Good question. For Blink, when we own and operate the charging station, we default to per kilowatt hour. There's about... I think there's six or seven states still in the U.S. that mandate time. In those states where it's a law, obviously, we comply with that, and we price based on time. Everywhere else, we're pricing based on per kilowatt hour. I'm not sure I followed the irrelevance of the L2, but just to give you a couple, maybe interesting points. When we install a Level 2 charging station turnkey, meaning we fund 100% of that installation, if the charger returns 10% utilization or more, our ROI is about two and a half years.
If it's a hybrid where we're just funding the station, not the infrastructure, again, same 10%, it's about 18 months. The ROI is pretty short. I'm not sure if that 100% answered your question, but okay.
Any other questions? I guess one of the big sort of, I always call it concerns in the industry, is that outside of Tesla, like, a lot of the other networks are not reliable. I guess, what is your views on that? What is the company doing to address reliability? you know, how important is that as part of your, you know, customer acquisition targets and just satisfaction?
Yeah.
Across the customer base?
Bill, it's one of my favorite topics. Let me start with, number one we need to come to a common definition of what uptime means, right? Because you have some people reporting charger uptime, you have other people reporting station uptime. What that means is they could say their station uptime is 100% if they have 10 chargers, but nine of them are down and one of them is active, right? I don't know that that's always the best measure. For Blink, I can tell you it is front and center, maybe the number one issue that we're seeing from customers. Meaning, what is important to prospects and to customers is station uptime, and that comes up in 100% of the conversation.
We are ensuring that our systems and processes and internal focus are very much geared in that way. One example is, when you have cloud-based network charging stations, you can monitor those stations from a central location. We do that out of Tempe, Arizona, as well as Bowie, Maryland. We do things like for tier one clients, we actually check their charging stations, the health of their charging stations every day, and we initiate proactive service events if necessary. Finally, guys like us sitting up here, we have KPIs built into our bonus programs that are actually tied to uptime. It is taken very, very seriously at Blink, and it's a central issue in the industry right now.
Last year, obviously, everyone was caught off guard by supply constraints. Where are we today? Are there any headwinds that remain? Maybe outside of that, I mean, permitting tends to be an issue, but, you know, how is that evolving as well?
We're seeing, you know, what was headwinds, now we're seeing that being relaxed. You know, we're seeing supplies available. We were proactive last year, you know, middle to the end of last year, where before we were manufacturing, I guess you could say, we were accumulating or acquiring chargers proactively, so we were ready for any constraints or higher volume increases and stuff. We were proactive in securing that inventory, and the supplies now, as we're manufacturing, we're seeing a relaxation of any constraints, at least on the near term.
We're also seeing improvement on the DC fast charger lead times. What continues to be a challenge are utility transformers, right? Is, you know, that's still, you know, a year. There are some utilities that are quoting more than that. You know, so that's the gating factor right now, I'd say more than, you know, our own equipment.
I want to come back to some market opportunities, one of the markets that looks interesting for, you know, broadly, is the fleet opportunities. You know, you announced a contract to provide charging for the U.S. Postal Service.
Mm-hmm.
Can you elaborate on that? As in, what other sort of momentum do you see in the, in the fleet space?
Yeah. We can elaborate as far as, you know, what's public, right? What's public is the fact that they, we signed a kind of a blanket purchase agreement for up to 41,500 charging stations over the next five years, roughly. We received our initial order for 5,000. We are actively shipping against that. They're receiving that product in Kansas, and they are then redeploying it out in a from that central location there. We are doing extremely well with that. We passed our first article testing with flying colors, you know, the credibility for Blink associated with that selection in the fleet space is, you know, hard to measure, right? It's very important for us.
It's opened a lot of doors in the fleet space for us to start to make inroads. We're doing that both on the charger sales side, but also on the network integration side with fleets.
Yeah. you know, you guys have a strategy, have a footprint in Europe. How does that market differ? How is it the same? What are the key opportunities set that you have in Europe that maybe is unique relative to that region compared to the U.S.?
Yeah. Europe is a, is an important strategy for ours. Over the past 12-24 months, we acquired two companies, one in Belgium and the other one in the, in the U.K. I guess, technically, not Europe, but. It's a, it's a strong opportunity. The EV penetration rate in Europe is more advanced than the U.S. We have a headquarters in Amsterdam that's actually centralizes the whole European footprint. We look at that as a, an anchor for the rest of Europe and that whole region. It's a very important play for us. In Europe, actually, there's more of the owner-operator model is much more dominant in that footprint and that versus the U.S.
As Mike mentioned earlier, we're trying to normalize both markets on the U.S. side as well as the European side, both owner-operator as well as hardware sales.
The only thing I'd add to it is, the two acquisitions that we made, Blue Corner in Belgium and EB in the U.K., they're strong within their respective markets, but they've historically only operated in those markets. Now what we're able to do is scale that, right? Is to take that, expand our operational footprint, our sales footprint, and move into other countries, within Europe. You know, we're already making headway there. We have activity in the Netherlands now, so that's new. We have salespeople there now that are closing deals, and, you know, we will continue that kind of across the continent.
You just talked about M&A. I guess, are there other areas that in your portfolio looking to strengthen? I mean, what is your view also on just consolidation in this space more broadly?
You know, we're By definition, our company, we've been built on acquisitions. I think to date, we've done over 10 acquisitions to build the company over the past three years. I think we're up to six, five or six. I'm losing count on each hand. We're always active in the M&A front. We're opportunistic. This year, we're spending a lot of time on integrating those acquisitions from the last 12-24 months. It's important to digest those acquisitions, squeeze out the synergies, and monetize those benefits. We're always inquisitive on other M&A activities. It's got to be strategic, fit our strategic model, our geographic, preferences, and our strategies.
Obviously, you know, your footprint today, you've made these acquisitions, but if we think about your ability to address the vast market opportunities, how do you balance, I guess, raising or, you know, expanding on your go-to-market, you know, teams, spending more on sales, marketing folks, applications, all these kind of things, versus, you know, trying to drive operating leverage in the model? How's your view on that?
Okay. One of the ways that we have attacked that is through a robust channel strategy. Instead of, you know, taking all business direct and just adding people in order to be able to do that, we've aligned with some really strong electrical industry channel partners. If you're familiar with companies like Graybar and WESCO and Rexel, and there's a bunch of them, right? That are very good partners of ours. We've made a concentrated effort to work with those companies that have very large national footprints, and obviously, that gives us access to not only to just a broader geography, but it enables us to see opportunities that we wouldn't see on our own if we were just trying to add salespeople quickly.
We're gonna do, we're gonna employ very smart expansion strategies that limit the amount of heads that we need to add. That's how we're going to market for sure.
Anything to add? Okay. I guess, how does Blink feel about your current cash position? Is any liquidity required as you scale your business? I mean, I guess, what kind of leverage do you have to raise capital as needed?
Yeah, obviously, you know, cash is king, as we know, in this growing space and the infrastructure needs. As of March 31st, we had $103 million in cash. We have an active ATM that, you know, we look to utilize, and we know capital is going to be needed, so we are looking at various strategic fundraising capital through debt financing or the government funding that's very prevalent. There's also European Investment Bank funding that's available. We're looking at all options, and you know, we analyze the cost of each of those, and we make decisions based upon an ROI and an IRR on those, you know, capital needs.
Okay. Just wanna stop and see if there's any, you know, questions here from the audience before moving forward. Okay. I want to come back. Maybe you could speak, and it wasn't really in the presentation, you obviously see this DC, but maybe you could speak to the product portfolio and what it looks like today, 'cause you've actually made since we had you guys here at our autos conference last year, you've actually kind of made a lot of advancements in that. What's, what's next? What are you working on from a technology roadmap?
There's the hardware side, and there's the software side. On the hardware side, we have the full complement of Level 2 charging stations from, you know, 30 amps to 80 amps, and that's the top end of the Level 2 spectrum. Then on the DC side, everything from a 30 kW station on the low end to 360, and we'll be going beyond that on the DC side. Now that's just, you know, that's just the offering. What's really next for us is implementing aspects of vehicle-to-grid, V2G. The first iteration of that for us is gonna be plug-and-charge. One aspect of V2G is the ability for the car and the charger to authenticate so that you don't need to swipe a credit card, you don't need an app, you don't need those things.
In order for that to happen, the car needs to be equipped with plug-and-charge, and the charger needs to be equipped. Both of those things have to happen in order for there to be a handshake for that to authenticate. Before the end of the year, we're gonna have plug-and-charge functionality enabled. We already have thousands of charging stations actually in the market that have the 15118 chip that enables V2G, so we're working on pushing that software out before the end of the year to enable plug-and-charge. That's there. What's on the screen is our newly announced Blink manufactured DC fast charger. That is going to start at 180 kW.
What we announced last week, I think it was last week, was 240 kW, which is combo NACS, CCS connector, and that's based on silicon carbide technology. You know, kind of latest and greatest stuff, but really, what we're focused on is providing the full range of hardware, but also implementing the software solutions that the market needs now. V2G is something that we have on the roadmap, that we're looking to, but it's not something that we're implementing tomorrow. We're gonna start with plug-and-charge.
Just maybe a little bit more on software. What would you say is unique about your offering? Maybe you can tie it to the fact that you guys have both hardware and software, and how important is that for-
Yeah.
... things like handoff, interoperability.
Yep.
... connectivity, things like that?
There's a couple aspects to the software side. Number one is when we have our own hardware and we have our own software, we can control the entire process. A concrete example of that is we're able to develop firmware and own the firmware, you know, soup to nuts, rather than sourcing from a third party. If we source our hardware from a third party, they will typically own that firmware. If an issue arises or there's a feature that we want built in, we're having to push a third party to do that, we're kind of at the mercy of their timeline, their expertise, etc . As we bring more of this in-house, we, again, control our own destiny. That's one.
The second piece of it, from the software perspective, is the just the breadth of our network. When you are a customer, and you install a Blink Charging station, and it's connected to the Blink network, you are now part of a publicly viewable and accessible network of thousands of charging stations from coast to coast in the U.S., or again, similarly, in Europe. Rather than, let's say, a smaller company that doesn't have much experience or breadth or scope, you know, you kind of get that advantage.
I guess as we kinda come to the end of the talk here, I guess we think about the year in aggregate, and maybe you come here next year, what will the team have achieved by then? What are the key sort of milestones that we should be looking out for?
We're excited for 2023 and going forward. We have a lot of initiatives that we have in the works. Again, 2023 is a year for integration, scalability, and we're really looking forward to, as we head into 2024, where we have target views for achieving EBITDA, adjusted EBITDA, positive and really turning the trend, the negative trend around, and really excited about the opportunities, the integration of the teams, the networks that we are integrating. We're still operating four networks that will be combined into one during 2023. Just the complete scalability of the company, and really positioning it for the continued advancement of the EV revolution and adoption.
I guess, just, you know, last question, just anything we didn't cover today that you wanna make sure that investors are, I guess, clear on?
Yeah. I would say it's not necessarily something that we didn't cover, but I do want to reemphasize, right. The question we get is, why are we different than anybody else? It really comes down to a couple things. One is, again, fully vertically integrated. We control that process from end to end. Secondly, the flexibility with which we go to market in terms of the four different business models, and even our ability to pivot off those. Our focus is to bring recurring high-margin revenue into this company, and we're gonna do it even when we sell charging stations. If we sell a charging station to a customer, we can do things like ask for a percentage of the revenue in exchange for maintenance services, right. That they don't have to worry about it.
Anywhere that we can get a hook into recurring revenue from the utilization of the charging station, that's what we want to do. We are very unique in the sense that we can take advantage of any opportunity, whether it's a hardware sale or whether it's an owner/operator.
I would just add that also, given our now manufacturing capabilities, we can pivot, make changes. Just an example with the new, what's going on with the connectors, you know, we could pivot very quickly and be able to adapt and change and whatever else is gonna come forward in the future, in the evolution and revolution of the EV charging space.
Well, Michael, thanks a lot. That was insightful. Appreciate it.
Thanks, Bill.
Thank you. Thank you.