Blink Charging Co. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023; comparative periods are 2022. Unaudited consolidated financial statements. Amounts below are in USD millions unless otherwise noted.
Business context
Blink sells EV charging equipment, operates charging stations and network services, and runs an EV car-sharing business. At June 30, the company reported 78,769 chargers sold or deployed, including 59,797 in its network; 4,865 network chargers were company-owned. Envoy Technologies was acquired on April 18, 2023 and contributed $0.654 million of revenue and a $0.851 million net loss through June 30.
Financial performance
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $32.842 | $11.486 | $54.510 | $21.286 |
| Gross profit | $12.291 | $1.957 | $16.834 | $3.543 |
| Gross margin | 37.4% | 17.0% | 30.9% | 16.6% |
| Operating expenses | $52.355 | $23.919 | $87.737 | $40.547 |
| Operating loss | $(40.064) | $(21.962) | $(70.903) | $(37.004) |
| Net loss | $(41.482) | $(22.621) | $(71.283) | $(37.764) |
| Basic and diluted loss per share | $(0.67) | $(0.52) | $(1.20) | $(0.88) |
| Cash used in operating activities | Not presented quarterly | $(65.040) | $(30.986) |
Revenue increased 186% in Q2 and 156% for the half year. Product sales were the largest revenue source: $24.587 million in Q2 and $40.976 million for the half year. Management attributed growth to higher equipment sales, charger utilization and network deployments. Gross margin improved substantially, but operating expenses—especially compensation—grew faster than revenue, and net losses widened.
Liquidity, funding and balance sheet
- Cash and cash equivalents were $74.464 million at June 30, up from $36.562 million at December 31, 2022; working capital was $100.484 million, versus $48.962 million.
- Cash used in operations was $65.040 million in the first half. Investing used $10.833 million; financing provided $112.426 million, principally from equity offerings.
- The company raised $94.766 million net in a February public offering and received $18.488 million net through its ATM program in the first half. Shares outstanding increased from 51.48 million at year-end to 63.99 million at June 30.
- Management’s liquidity table reports debt of $47.426 million, versus $40.618 million at year-end. The balance sheet separately lists $4.795 million of notes payable and $60.749 million of consideration payable; these figures are not a simple reconciliation of the MD&A debt measure.
- Management expects cash on hand to fund operations for at least 12 months after issuance of the financial statements, but says it expects continuing operating cash outflows and has not achieved profitability.
Material changes, outlook and risks
- Costs and unusual items: Q2 compensation expense was $37.990 million, including approximately $11.6 million of described non-recurring CEO and milestone bonus expense, and accelerated equity vesting related to the former CEO. First-half stock-based compensation was $19.439 million.
- Envoy acquisition: Preliminary purchase consideration was $30.9 million, including $18.118 million of stock consideration and $6.782 million of promissory notes. The preliminary allocation recorded $27.797 million of goodwill; valuation remains subject to the measurement period.
- SemaConnect deferred consideration: An August 4, 2023 amendment changed payment terms on $40.6 million plus accrued interest: increased interest from 7% to 9.5%, shortened the due date to April 1, 2025, added security and guarantees, and provided conditional conversion rights. The amendment also calls for $1.0 million in shares and reimbursement of certain expenses.
- Commitments and contingencies: Purchase commitments were approximately $33 million, expected to be received over the next 12–24 months. The company disclosed securities and derivative lawsuits, with no accrual recorded because losses were assessed as not probable or estimable. It estimated $0.390 million to repair deployed chargers and reported $0.221 million for known warranty backlog.
- Regulatory matter: Blink received an SEC subpoena in July 2023 concerning, among other topics, executive departures, related-party transactions, charger counts and disclosures. The company is cooperating and says the timing, outcome and potential consequences are unknown.
- Controls: Management concluded disclosure controls were not effective at June 30 due to previously disclosed material weaknesses. It reported remediation of certain access and change-management design deficiencies, but operational validation and remediation of other weaknesses remained in progress.
- Other risks: Management cited continued losses, financing needs, EV adoption and demand, competition, regulation, acquisitions, supply-chain and macroeconomic uncertainty, and foreign-exchange exposure. No specific revenue or earnings guidance was provided.
Important facts for investors to verify
- Whether revenue growth and gross-margin improvement can continue while operating expenses and cash burn are controlled.
- The assumptions behind management’s 12-month cash runway, including ongoing operating cash use and future financing needs.
- The final Envoy purchase-price allocation and the timing, form and dilution implications of its outstanding consideration.
- The effect of the amended SemaConnect obligations on liquidity, collateral and potential share issuance.
- Developments in the SEC inquiry, litigation matters and remediation of internal-control weaknesses.
- Whether the proposed Blink Mobility spin-off or IPO proceeds; the filing says there is no guarantee it will occur.