Blink Charging Co. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Dollar amounts are in millions unless otherwise stated. Blink sells EV charging equipment and provides charging-network, charging-service and related offerings, alongside a Los Angeles ride-sharing program.
Financial performance
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $17.2 | $6.4 | $38.5 | $13.0 |
| Gross profit | $4.8 | $0.9 | $8.3 | $1.5 |
| Gross margin | 27.7% | 13.9% | 21.6% | 11.3% |
| Operating loss | $(24.5) | $(15.8) | $(61.5) | $(35.6) |
| Net loss | $(25.6) | $(15.3) | $(63.4) | $(36.1) |
| Basic and diluted loss per share | $(0.51) | $(0.36) | $(1.39) | $(0.87) |
- Q3 revenue increased 169%; nine-month revenue increased 197%. Product sales were the largest source of growth, alongside higher network fees and charging-service revenue. Acquisitions contributed materially to sales.
- Gross margin improved versus the prior-year periods, but operating expenses rose to $29.3 million in Q3 and $69.8 million for nine months, outpacing gross profit. Higher personnel, professional-service, acquisition-related, network-upgrade and other costs contributed.
- Operating cash use was $57.8 million for nine months, versus $30.0 million in 2021. Investing cash use was $54.2 million, including acquisition payments; financing used $0.8 million. Cash and restricted cash declined by $118.0 million to $57.1 million.
- At September 30, cash and cash equivalents were $57.0 million; working capital was $64.4 million. The company reported debt of $40.7 million, primarily the $40.6 million deferred SemaConnect consideration bearing 7% interest; notes payable were $0.1 million. Total liabilities were $91.4 million.
- Accounts receivable rose to $18.8 million from $6.3 million at year-end, while inventory rose to $24.3 million from $10.4 million. Deferred revenue totaled $13.7 million.
Material changes and notable items
- Blink acquired SemaConnect in June for stated aggregate consideration of $200.6 million, including $46.1 million cash paid at closing, $40.6 million deferred cash consideration, and 7.45 million Blink shares valued at $113.8 million. SemaConnect contributed $8.8 million in revenue and a $1.2 million net loss from acquisition through September 30.
- Blink acquired Electric Blue in April for fair-value consideration of $19.3 million, including cash, shares and contingent consideration. Electric Blue contributed $2.6 million revenue and a $2.1 million net loss after acquisition. Its contingent consideration was valued at $4.0 million at September 30, subject to performance targets.
- Acquisitions drove substantial balance-sheet growth, including goodwill of $201.4 million, up from $19.4 million at year-end, and net intangible assets of $28.6 million, up from $3.5 million.
- Common shares outstanding increased to 50.9 million from 42.4 million at year-end, largely reflecting acquisition consideration. A $250 million at-the-market equity program was established in September; no shares had been sold under it as of November 3, 2022.
Outlook, risks and contingencies
- Management said it expects cash on hand to fund operations for at least 12 months from the financial statements’ issuance date, while also expecting continued operating cash outflows and losses. Blink has not achieved profitability and says additional capital may be needed; future financing availability and terms are not assured.
- Management expects charging demand to increase as economies reopen but cannot predict the extent. COVID-related uncertainty, chip shortages, supply-chain and equipment-delivery delays, inflation, slowing growth, currency movements and geopolitical conditions could affect operations and cash flows.
- Purchase commitments were approximately $55 million, expected to be fulfilled over the next 12–24 months. The remaining estimated cost of the 2G/3G-to-4G LTE network upgrade was approximately $0.9 million; completion was expected by December 31, 2022.
- The filing describes a securities class action and several shareholder derivative matters. Blink disputes the allegations and had not accrued losses for the matters it considered not probable or estimable. One derivative action was settled, with governance and director-compensation changes and legal costs.
- Disclosure controls and procedures were reported not effective due to a material weakness previously identified in internal control over financial reporting. Management described remediation work and planned further testing in Q4 2022 before its year-end assessment.
- Other risks include competition, dependence on EV adoption and incentives, acquisition integration, changing charging standards and technology, and foreign-exchange exposure. Blink reported foreign-exchange transaction losses of $0.8 million for nine months and does not hedge currency risk.
Most important facts for investors to verify
- Whether revenue growth and improved gross margins can continue as acquired businesses are integrated, and whether operating costs and cash burn can be contained.
- Cash runway assumptions, use of the $250 million ATM capacity, and the potential dilution and financing needs if operating cash outflows persist.
- Payment timing and interest implications for SemaConnect’s $40.6 million deferred consideration, and whether acquisition performance supports the purchase valuations and contingent payments.
- Progress on acquisition integration, the LTE network upgrade, and supply-chain and chip-shortage constraints; assess the $55 million purchase commitments against demand and inventory needs.
- Developments in litigation and the company’s remediation and testing of the material weakness in internal controls.