Blink Charging Co. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Dollar amounts below are in millions unless stated otherwise. Blink sells and operates EV charging equipment and charging networks. Its results include Blue Corner from its May 10, 2021 acquisition.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $6.402 | $0.906 | $12.990 | $3.777 |
| Gross profit | $0.892 | $0.367 | $1.463 | $1.089 |
| Gross margin | 13.9% | 40.5% | 11.3% | 28.8% |
| Operating expenses | $16.715 | $4.280 | $37.019 | $11.043 |
| Operating loss | $(15.823) | $(3.913) | $(35.556) | $(9.954) |
| Net loss | $(15.321) | $(3.914) | $(36.145) | $(9.905) |
| Loss per share, diluted | $(0.36) | $(0.12) | $(0.87) | $(0.34) |
- Q3 revenue rose 607%; nine-month revenue rose 244%. Product sales were the largest revenue category, at $4.824 million in Q3 and $9.762 million for the nine months. Growth reflected higher equipment sales, charger-network activity and the Blue Corner acquisition.
- Gross margin contracted substantially as cost of revenue grew faster than sales. Operating expenses rose sharply, particularly compensation; nine-month compensation included $10.308 million of stock-based compensation.
- Operating cash used was $29.953 million for the nine months, compared with $10.157 million a year earlier. Investing cash used was $81.982 million, including $60.267 million of marketable-security purchases and $22.985 million of cash consideration for Blue Corner. Financing provided $222.913 million, mainly from the January share offering.
- At September 30, cash was $133.153 million and marketable securities were $53.577 million. Working capital was $187.169 million. Total notes payable were $0.493 million; total liabilities were $14.406 million. Cash and marketable securities together were approximately $186.7 million.
- Total assets were $238.772 million, including $19.255 million of goodwill. Accumulated deficit was $223.496 million.
Material changes and significant items
- In January, Blink raised $221.406 million net through an offering of 5.66 million shares at $41 per share. Shares outstanding increased from 35.95 million at year-end 2020 to 42.20 million at September 30, 2021.
- Blink acquired Belgian charging-network operator Blue Corner for approximately $23.775 million, primarily cash. The preliminary purchase accounting included $17.764 million of goodwill. Blue Corner contributed $4.261 million of revenue and $1.523 million of net loss from acquisition through September 30.
- Q3 included $6.224 million of stock-based compensation, including $5.329 million related to the CEO’s special performance option. The nine-month period also included a $1.000 million settlement payment to the CEO concerning a prior share-transfer dispute.
- A $0.379 million PPP loan-forgiveness gain was included in Q3 and nine-month results. A further $0.477 million PPP loan forgiveness occurred after quarter-end.
- Management reported approximately $24 million of federal and state grant awards during the first nine months, expected to be recognized in future periods under the applicable grant terms or over charger service lives.
Outlook, risks and contingencies
- Blink has not achieved profitability and expects operating cash outflows to continue. Management stated that existing cash was expected to fund operations for at least 12 months from issuance of the financial statements; it also noted that future funding may be needed and cannot be assured on acceptable terms.
- Management expected EV charging demand to increase as economies reopened, but said it could not predict the extent or timing of recovery. COVID-19, chip shortages and supply-chain disruption had delayed some equipment shipments; their financial impact remained uncertain. No specific revenue or earnings guidance was provided.
- As of September 30, Blink had approximately $13 million in purchase commitments, primarily for charging stations and related items. An October amendment extended a contract-manufacturer agreement by five years and could create costs for units ordered but later canceled or unfulfilled.
- Several securities and shareholder derivative lawsuits remained pending or stayed. Blink had not accrued losses for the described matters because it determined losses were not probable or estimable. The JMJ warrant dispute was settled through delivery of 66,000 shares, without a cash payment. A proposed settlement in the Wolery case remained subject to court approval.
- Disclosure controls and procedures were deemed ineffective due to previously reported material weaknesses in internal control over financial reporting, which continued at quarter-end. Management said remediation and testing efforts were ongoing.
- The filing reported significant customer concentration: one customer represented 16% of accounts receivable at quarter-end; two customers represented 11% and 10% of Q3 revenue.
Important facts for investors to verify
- Whether revenue growth translates into improved gross margins and lower operating cash use, given the sharp increase in costs and continuing losses.
- Blue Corner’s ongoing contribution, integration costs, and the final purchase-price allocation and recoverability of acquisition goodwill.
- The timing and conditions for recognition of the reported grant awards, and delivery or cancellation exposure under purchase commitments and the extended manufacturer contract.
- Progress in remediating internal-control weaknesses and the status and potential costs of pending litigation and the proposed Wolery settlement.
- Actual cash runway relative to management’s estimate, including future investment needs, operating losses and any additional financing or dilution.