Blink Charging Co. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Amounts below are in millions of U.S. dollars unless stated otherwise. Blink manufactures, owns and operates EV charging equipment and networks, and also provides EV car-sharing services.
Financial performance
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $43.4 | $17.2 | $97.9 | $38.5 |
| Gross profit | $12.8 | $4.8 | $29.6 | $8.3 |
| Gross margin | 29.5% | 27.7% | 30.3% | 21.6% |
| Operating loss | $(110.7) | $(24.5) | $(181.6) | $(61.5) |
| Net loss | $(112.7) | $(25.6) | $(184.0) | $(63.4) |
| Loss per share, diluted | $(1.74) | $(0.51) | $(3.02) | $(1.39) |
Revenue rose 152% in Q3 and 154% year to date, led by product sales, which increased 162% and 151%, respectively. Management attributed growth to higher sales of commercial, DC fast and residential chargers, greater use of company-owned stations, and expansion of the network. The results also include Envoy, acquired in April 2023. Gross margin improved year over year, but operating losses widened substantially.
- Q3 results included goodwill impairment of $89.1 million and intangible-asset impairment of $5.1 million. The charges followed a decline in Blink’s share price and an assessment that reporting-unit carrying values exceeded estimated fair values.
- Nine-month compensation expense was $76.0 million, up 102%; management cited higher staffing, stock-based compensation, former-CEO separation costs and a non-recurring bonus. The filing also describes cost-reduction and integration efforts.
Cash, liquidity and obligations
- At September 30, cash and cash equivalents were $66.7 million, working capital was $94.5 million, and accumulated deficit was $518.0 million. Current assets were $160.8 million and current liabilities $66.4 million.
- Nine-month operating cash use was $77.2 million, versus $57.8 million in 2022. Investing activities used $12.5 million; financing activities provided $120.9 million, primarily from equity offerings. Cash and restricted cash ended the period at $66.8 million.
- Management said existing cash was expected to fund operations for at least 12 months after issuance of the financial statements. Blink has not achieved profitability, expects continued operating cash outflows, and said additional financing may be needed; future financing availability and terms are uncertain.
- The MD&A reports debt of $47.4 million. Separately, the balance sheet reports $60.8 million of consideration payable, including Envoy acquisition consideration. The SemaConnect deferred merger consideration remained $40.6 million plus accrued interest; amended terms raised interest to 9.5%, secured the obligation with U.S. subsidiary guarantees and asset liens, and moved the due date to April 1, 2025.
- Purchase commitments were approximately $49.5 million, expected to be received over the next 12–24 months. Future minimum lease payments were $8.8 million for operating leases and $2.3 million for finance leases.
Material developments, outlook and risks
- Blink acquired Envoy Technologies in April for stated aggregate purchase consideration of $30.9 million; reported Envoy revenue and net loss from acquisition through September 30 were $1.9 million and $1.5 million. Blink was planning a possible spin-off and IPO of its Mobility business and had engaged an investment bank, but said there was no assurance either would occur.
- Financing increased shares outstanding: Blink raised $94.8 million net in a February public offering and received $27.6 million net from ATM sales during the first nine months. Shares outstanding were 67.1 million at quarter end, versus 51.5 million at December 31, 2022.
- Management’s liquidity plan aims to improve revenue economics and reduce selling, general and administrative expenses through product optimization, acquisition integration and cost controls; execution is not assured. The filing gives no specific revenue, earnings or margin guidance.
- Disclosure controls and procedures were deemed ineffective because of material weaknesses in internal control over financial reporting. Blink identified a weakness in the timing and documentation of goodwill impairment controls after the initial impairment calculation was miscalculated; management expected remediation in Q4 2023.
- Blink disclosed a July 2023 SEC subpoena seeking records concerning, among other matters, executive departures, related-party transactions and charging-station disclosures. The company said it was cooperating and could not predict the investigation’s timing or outcome. Several shareholder and securities-related lawsuits were also described; Blink had not recorded accruals for those matters, concluding losses were not probable or estimable.
- Key operating risks include continued losses and cash burn, competitive and EV-adoption uncertainty, reliance on external financing, acquisition integration, changing incentives and regulation, supplier concentration, and foreign-currency exposure.
Important facts for investors to verify
- Whether revenue growth and gross-margin improvement can persist, and whether operating costs and cash burn decline as planned.
- Cash runway and financing needs, including the implications of dilution and the SemaConnect repayment terms and security interests.
- Progress on remediation of the material weaknesses and the final outcome of the SEC investigation and litigation.
- Assumptions supporting the large goodwill and intangible-asset impairments and the remaining carrying values.
- The MD&A table lists Q3 cost of revenues as $31.0 million, while the financial statements report $30.6 million; the latter reconciles to reported gross profit. Confirm the correct figure in the filed statements.