Blink Charging (BLNK) Q2 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Thursday, Aug. 6, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Investor Relations - Vitalie Stelea
• President and Chief Executive Officer - Mike Battaglia
• Chief Financial Officer - Michael Bercovich

Need a quote from a Motley Fool analyst? Email pr@fool.com

TAKEAWAYS

• Total Revenue -- $21.7 million, a 24.5% decrease from $28.7 million in the prior-year period, reflecting a deliberate shift to prioritize higher-margin revenue streams over volume.
• GAAP Gross Margin -- 38.9%, representing a 2,200 basis point increase from 16.8% in the second quarter of 2025, driven by portfolio optimization and a transition to contract manufacturing.
• Adjusted EBITDA Loss -- $2.2 million, a 72% improvement compared to an $8.4 million loss in the second quarter of 2025, resulting from structural cost realignments.
• Operating Expenses -- $14.7 million, a 57% reduction from $34.4 million in the prior-year period, following the Blink Forward transformation initiative.
• Service Revenue -- $11.5 million, a 6.2% increase from $10.8 million, driven by repeatable charging revenues and recurring network fees.
• Product Revenue -- $7.4 million, a 48.7% decrease from $14.5 million in the prior-year period, reflecting disciplined deal selection and margin prioritization.
• GAAP Net Loss -- $6.0 million, or $0.04 per diluted share, an improvement of $23.3 million from a $29.3 million loss in the second quarter of 2025.
• Compensation Expenses -- $8.4 million, down 39% from $13.8 million, following headcount reductions and organizational rightsizing.
• G&A Expenses -- $1.8 million, an 83% reduction from $10.7 million in the prior-year period, as cost optimization efforts continued to compound.
• Cash and Cash Equivalents -- $34.0 million as of June 30, 2026, providing the company with liquidity to fund DC fast charging network expansion.
• Full Year 2026 Revenue Guidance -- updated to a range of $83 million to $90 million, down from the previous $105 million to $115 million, due to a strategic focus on revenue quality.
• Full Year 2026 Gross Margin Guidance -- raised to approximately 38% on a GAAP basis, up from the prior forecast of 35%.
• Envoy Technologies Divestiture -- completed on June 5, 2026, resulting in a 25.9% decrease in car-sharing revenues to $0.8 million.
• Six-Month Net Cash Burn -- approximately $5.6 million, an improvement from $30.1 million in the first half of 2025.
• Days Sales Outstanding -- below 80 days for the second consecutive quarter, reflecting refined working capital and liquidity management.
• Repeat and Recurring Revenue Target -- 80% of total revenue by 2028, with hardware sales expected to comprise the remaining 20%.
• DC Fast Charging Footprint -- 169 sites and 519 stalls targeted by the end of 2026, supported by 25 new sites currently in development.
• EnergyConnect Platform Launch -- occurred in Aug. 2026, introducing AI-driven energy management capabilities including real-time load monitoring and automated load balancing.
• European Market Penetration -- 17.5% for new battery electric vehicles sold, supporting growth for company operations in the U.K. and Belgium.
• Other Operating Expenses -- $4.1 million, down from $6.7 million in the prior-year period, as structural cost improvements were realized.
• Non-GAAP Adjusted Gross Margin -- 47.9%, an increase from 45.7% in the second quarter of 2025.
• Inventory Net -- $11.3 million as of June 30, 2026, compared to $14.2 million at the end of 2025, reflecting improved inventory management.
• Envoy Annual Revenue Impact -- $4.7 million in last 12 months revenue that will no longer recur following the June divestiture.

SUMMARY

Blink Charging Co. (NASDAQ:BLNK) reported a strategic transition toward revenue quality over volume, resulting in a narrowed adjusted EBITDA loss and expanded GAAP gross margins. The company completed the divestiture of its Envoy Technologies car-sharing subsidiary and revised its annual revenue guidance downward to reflect a prioritization of profitable service contracts and recurring revenue streams. Management emphasized the launch of EnergyConnect, an AI-driven energy management platform, as the foundation for the company's evolution from a hardware provider to a broader energy services entity. The company aims to reach adjusted EBITDA breakeven by the end of 2026 while continuing to scale its owned and operated DC fast charging infrastructure.

• CEO Battaglia stated that the company will evaluate every customer contract renewal and "execute only when the terms work for Blink," otherwise choosing to "walk away."
• Management reported that by 2028, the company targets 80% of total revenue to come from repeat and recurring streams, including charging revenues and network fees.
• The company launched EnergyConnect in Aug. 2026, an AI-driven platform designed to provide real-time load monitoring and automated load balancing across charging networks.
• CEO Battaglia described the gap between consumer perception of infrastructure availability and actual availability as the primary "opportunity for Blink."
• CFO Bercovich indicated that the company’s structural cost actions are largely complete, with current operating expenses representing a "good rep for the business going forward."
• Management confirmed plans to bring battery storage under the EnergyConnect platform in the first half of 2027 to enable peak shaving and electricity arbitrage.
• The company is utilizing third-party hardware from Tellus Power, Kempower, and Sinexcel to support its DC fast charging build-out and product sales.

INDUSTRY GLOSSARY

• DC Fast Charging (DCFC): High-speed charging technology that provides rapid power delivery to electric vehicles, significantly faster than standard residential chargers.
• Adjusted EBITDA: A non-GAAP financial metric that calculates earnings before interest, taxes, depreciation, and amortization, adjusted for non-cash items like stock-based compensation.
• EnergyConnect: Blink's proprietary AI-driven energy management platform used for load balancing and demand charge mitigation.
• Level 2 (L2) Charging: A standard level of electric vehicle charging using a 240-volt electrical outlet, typically found in residential and commercial locations.
• Peak Shaving: The practice of reducing electricity consumption during periods of maximum demand on the electrical grid to lower utility costs.
• Load Balancing: The process of distributing electrical power across multiple charging ports to prevent system overloads and optimize energy use.

Full Conference Call Transcript

Operator: Good afternoon, ladies and gentlemen, and welcome to the Blink Charging Company Second Quarter 2026 Earnings Call. [Operator Instructions] At this time, it is my pleasure to turn the call over to Vitalie Stelea.

Vitalie Stelea: Thank you, operator, and welcome to Blink's second quarter 2026 earnings call. With us today, we have Mike Battaglia, President and CEO; and Michael Bercovich, Chief Financial Officer. Today's discussions will include references to non-GAAP measures. These are reconciled to the most comparable U.S. GAAP numbers in the appendix of our earnings deck. You may find the deck along with the rest of our earnings materials and other important content on Blink's Investor Relations website. Today's discussions may also include forward-looking statements about our expectations. Actual results may differ from those stated, and the most significant factors that could cause results to differ are included on Page 2 of the second quarter 2026 earnings deck.

Unless otherwise noted, all comparisons are year-over-year. Regarding our calendar, Blink will participate in the H.C. Wainwright 28th Annual Global Investment Conference on September 14 and 15 in New York City. For additional events, please follow our press releases and Blink's Investor Relations website. I will now turn the call over to Mike Battaglia, President and CEO of Blink Charging. Please go ahead, Mike.

Michael Battaglia: All right. Thanks, Vitalie. Good afternoon, everyone, and thank you very much for joining us. So I'd like to set the stage for today's call by highlighting 2 achievements that exemplify the transformation at Blink. First, we narrowed our adjusted EBITDA loss to just $2.2 million this quarter, compared to a loss of $7.9 million in the second quarter of last year, representing a 72% improvement. And second, our GAAP gross margin was a strong 38.9%, that is a 2,200 basis point year-over-year increase or an improvement of $3.6 million on a lower revenue base.

Together, these 2 data points demonstrate that the plan we communicated and put in place at the beginning of this year is working and moving Blink decisively toward our goal of exiting 2026 at approximately breakeven. We'll come back to both of these data points in more detail in a few minutes, but I wanted to begin here as the rest of the call will reinforce these key points. The restructuring work is behind us, and you are seeing the company we committed to build, leaner, more focused and making deliberate decisions that prioritize quality of revenue, margin expansion and profitability.

Total revenue of $21.7 million was up 4.3% sequentially, and we were encouraged to see product sales grow 20% from the first quarter. We also completed the divestiture of Envoy Technologies on June 5. And while it impacted the top line in the second quarter, it reinforces our commitment to focusing resources and capital on optimizing the core business. And with every customer contract renewal, we evaluate the economics and execute only when the terms work for Blink. Otherwise, we walk away. The result is a higher quality revenue base as evidenced in margin performance. Again, GAAP gross margin of 38.9% this quarter compared to 16.8% in Q2 of last year. This sends a clear message, our plan is working.

Now turning to Slide 6. Market conditions within the U.S. electric vehicle market are strengthening, which underpin the fundamentals of our business. Used EV sales are robust as mainstream buyers consider alternatives to gasoline-powered vehicles in an environment of elevated global fuel prices. Similarly, in Q2, new battery electric vehicle sales demonstrated growth over Q1, reflecting steady market recovery since the discontinuation of the EV tax credit, and this is exactly what we were expecting. Consumers are choosing the predictability of charging costs associated with electricity over the spikes and fluctuations of geopolitically driven gas prices. Plug-in hybrids service the on-ramp, transitioning drivers toward full battery-powered EV ownership.

And new sales have also been showing global resiliency with Europe hovering at a 17.5% penetration rate of new vehicles sold, benefiting our businesses in the U.K. and Belgium. Importantly for us, infrastructure perception remains the #1 barrier to buying an EV. That gap between the customer's perception today and when they're going to feel comfortable with infrastructure availability is the opportunity for Blink. We own and operate infrastructure, and we are building into those perception gaps. On Slide 7 is the business model transformation that is driving margin expansion. By 2028, we are targeting repeat and recurring revenue streams to account for approximately 80% of total revenue, with hardware sales comprising the balance.

We achieved this with a deliberate plan that progresses through various stage gates, from raising capital to site pipeline generation to construction and deployment and finally, to owned and operated cash-generating DC fast charging assets. Recurring revenue drives predictability and this transition drives structural margin expansion. Moving to Slide 8. Our DC fast charging build-out plan totals 25 sites and 118 stalls, funded by the equity raise we completed in December of last year. We expect to have nearly all of those sites built by the end of 2026. This would bring our total DC charger footprint to about 169 sites, representing 519 stalls by year-end. Slide 9 is a visual representation of where we're headed.

This is a concept of one of our future DC fast charging sites. They're fast, incorporate energy management technologies and are located in high-density locations where people live, work and play. Turning to Slide 10. We highlight Blink's focus on innovation. This month, we are launching EnergyConnect, this month, our new energy management platform. This marks an important evolution for Blink. EnergyConnect is an AI-driven energy management system that will eventually be live across our DC fast charging and Level 2 networks. In simple terms, it transforms charging sites into a smarter, more valuable energy asset as it addresses 4 key areas for us and our site hosts. First, real-time load monitoring.

We can see actual power draw against configured limits at every site. Second, automated load balancing. The system distributes power intelligently phase by phase. Third, demand charge mitigation. Scheduled load limits reduce or eliminate expensive peak hour utility charges. And fourth, it lets us grow without underlying infrastructure upgrades. We can add more chargers on the electrical service already in place. These capabilities save us future OpEx and CapEx dollars, and this is a platform, not a feature, and it's live today. In the first half of 2027, we will bring battery storage under EnergyConnect control, unlocking peak shaving and electricity arbitrage.

And beyond that, it's the foundation for aggregating and monetizing distributed energy through a virtual power plant and participating in grid services. This marks our progression from a pure charging company into a broader energy company with EnergyConnect serving as the operating system that powers it. So with that, I'll turn it over to Michael Bercovich, our Chief Financial Officer, to review the financials in more detail, and then I'll circle back at the end of the call with concluding remarks. Michael?

Michael Bercovich: Thank you, Mike, and good afternoon, everyone. Q2 2026 is a quarter where the numbers validate our plan. Margins are expanding as revenue quality improves. Our structural cost realignment is delivering tangible results. Costs are reset in control, operating leverage is expanding and adjusted EBITDA loss has reached a multiyear low as we drive the business towards sustained profitability. And the balance sheet gives us the flexibility to invest in DC fast charging network and fund expansion with efficient capital. Let me walk you through the details, beginning with the selected financials on Slide 12. Q2 2026 total revenues were $21.7 million compared to $28.7 million in Q2 of 2025.

Let me provide some context for this and also underlying story. As we communicated previously, Blink is prioritizing quality of revenue over quantity. From time to time, Blink renews contracts and commercial agreements. And with every renewal, we are evaluating profitability expectations. If it doesn't fit, we walk away, which explains some of this reduction. We also completed the divestiture of Envoy Technologies, which sharpens our focus on the core EV charging business and supports additional improvements in our EBITDA profile. Product revenues were $7.4 million compared to $14.5 million in the second quarter of last year. This decline reflects deliberate strategic decisions.

While some participants in the industry continue to prioritize top line growth at the expense of margins, we remain focused on profitable growth, higher-margin opportunities and disciplined deal selection. We believe this strategy positions Blink for stronger and long-term shareholder value creation. Service revenue, which includes repeatable charging revenues and recurring network fees, grew 6.2% year-over-year to $11.5 million compared to $10.8 million in Q2 of 2025. This is the growth engine for Blink, both from a revenue and margin perspective. Further, with our ongoing margin optimization efforts, we are experiencing margin expansion. We will address this in more detail momentarily.

Other revenues, which consist of warranty fees, grants and rebates and other revenue items were $1.9 million in the second quarter compared to $2.3 million in the prior year period. Car sharing revenues were $0.8 million, a decrease of 25.9% compared to prior year period, primarily attributable to the Blink strategic divestiture of Envoy Technologies on June 5, 2026. For modeling purposes, Envoy's last 12 months revenues were $4.7 million, and they will not be recurring. As a reminder, starting with the fiscal year 2026, we have redefined our non-GAAP metrics to align with peers and industry practices.

You can see the definitions of these metrics in our earnings press release as well as in the appendix section of this presentation. The main difference is that we exclude noncash share-based compensation, other nonrecurring items as well as depreciation and amortization to better present the fundamental direction of our business. So let's get to it. GAAP gross profit in Q2 was $8.4 million or 38.9% of revenues compared to gross profit of $4.8 million or 16.8% of revenues in Q2 of 2025. That is 75% improvement in gross profit dollars on lower revenue and more than 2,200 basis points of margin expansion.

The gross margin percentage exceeded our expectations, driven by disciplined portfolio optimization, the shift to contract manufacturing and improved revenue mix. On a non-GAAP basis, adjusted gross margin was a robust 47.9%. The fundamentals of our business are stronger than ever. Our focus on higher quality revenue, disciplined portfolio management, contract manufacturing optimization and a richer mix of repeat, recurring and higher-margin revenue streams continues to enhance our margin profile. These are sustainable improvements that we expect to support further profitability as the business grows. Turning to operating expenses. Total operating expenses in Q2 were $14.7 million compared to $34.4 million in Q2 of last year, a 57% reduction year-over-year.

This reflects the successful execution of our Blink Forward transformation initiative and the completion of the restructuring actions over the past year. Importantly, those are structural, not temporary improvements. We have rightsized the organization, streamlined our cost structure and instilled greater discipline across G&A and compensation spending, and we continue targeting more. As a result, Blink is operating as a leaner, more focused and more efficient organization that is well positioned to drive profitable and predictable growth. Compensation expenses were $8.4 million, down 39% from $13.8 million in Q2 2025, reflecting the benefit of our headcount reductions.

G&A expenses were $1.8 million, down from $7 million (sic) [ $10.7 million] in prior year quarter, and other operating expenses declined to $4.1 million from $6.7 million as our cost optimization efforts continue to compound across the organization. GAAP net loss for Q2 was $6 million or $0.04 loss per diluted share compared to a net loss of $29.3 million or $0.28 loss per diluted share in Q2 of last year. That's an improvement of over $23 million in reduced net loss. Adjusted EBITDA for the second quarter of 2026 was a loss of $2.2 million compared to an adjusted EBITDA loss of $7.9 million in Q2 of last year.

That is a 72% improvement and it gets us closer to achieving profitability. Turning to our balance sheet and cash position. We ended Q2 with cash and cash equivalents of approximately $34 million. Days sales outstanding is now below 80 days, demonstrating the continued impact of enhanced working capital practices and refined liquidity management. For the first 6 months of 2026, net cash burn was approximately $5.6 million compared to $30.1 million in the same period last year, an improvement of approximately $24.5 million. Tighter financial management across the business gives us the flexibility to invest in our future DC fast charging network.

As we scale this infrastructure, we expect our cash burn to increase to support future repeatable cash flows from charging assets. Regarding the business outlook, I'd like to provide an update across 3 key areas. #1, revenue. We are revising our full year 2026 revenue guidance to between $83 million to $90 million from $105 million to $115 million previously. Here is why. With the focus on revenue quality, the Envoy divestiture and other commercially disciplined decisions, we are consciously choosing to run a leaner and more focused company. The emphasis is on the durable profitability and not just the top line for the sake of the top line.

Our updated guidance reflects thoughtful strategic choices, not a change in our confidence or long-term opportunities. While these actions reduce revenue in the short term, they improve overall business performance and financial health. #2, gross margins. We are raising our full year gross margin outlook to approximately 38% on a GAAP reported basis from approximately 35% previously. The drivers are well understood, disciplined portfolio optimization, selective renewal of contracts, contract manufacturing efficiencies and improved revenue mix and increased utilization of our own charging assets. Lastly, #3, path to profitability. We anticipate a further reduced adjusted EBITDA loss in the second half of the year as we continue business optimization efforts.

We recognize early that long-term success in this industry requires more than revenue growth. It requires a sustainable business model. Over the past year, we have focused on making the right decisions, not always the easiest ones, in order to build a stronger company. We believe the progress we have made reflects this discipline, and we're committed to continue to execute with the same focus going forward. And we choose to confront market challenges head on rather than wait for the markets to solve them for us. I will now turn it back to Mike to wrap it up. Go ahead, Mike.

Michael Battaglia: All right. Thanks, Michael. So the second quarter of 2026 was about broad execution and the results reflect that. At Blink, we are believers in intense focus and management accountability. We want to concentrate on the core, build the core and do what we do best. As we move through the remainder of 2026, our focus is on deploying capital, scaling the DC fast charging network, deploying energy management capabilities through EnergyConnect, and building a business that generates durable, repeatable revenue and reaches adjusted EBITDA breakeven in the fourth quarter. We have accomplished the hard structural adjustments. Now we are scaling what works.

I want to close by highlighting a few milestones and notable achievements in Q2. #1, GAAP gross margin of 38.9%, up from 16.8% a year ago. Quality of revenue is performing. Secondly, revenue up 4.3% sequentially. The business has stabilized. Third, adjusted EBITDA loss improved 72% year-over-year. The cost structure is right. And fourth, $34 million in cash and days sales outstanding at about 80 days for the second straight quarter. Our balance sheet gives us options. As a result of these achievements, we are targeting to exit 2026 at approximately breakeven profitability.

In 2027, we expect to return to revenue growth with a positive full year adjusted EBITDA, driven primarily by charging and energy services and increasing the repeatable and predictable revenue mix. We expect to provide formal 2027 guidance alongside our 2026 year-end results. And overall, since I became CEO, I've been clear about what Blink will do, build a company with fundamentally sound financials, operate with discipline and scale profitably over time. Every quarter, the results move in that direction. So I would like to extend a thank you to the Blink team for their continued focus and execution.

And I would like to thank our customers and drivers who rely on Blink to provide energy to their vehicles every day. With that, we can move on to Q&A. Operator?

Operator: [Operator Instructions] Our first question comes from Chris Pierce with Needham.

Christopher Pierce: Just one financial question and one kind of bigger picture question. Like -- sorry if I missed it, but did you guys give -- I know you gave the gigawatt hours, and you have been giving that in the past 4 quarters. Did you give -- like how should we think about utilization on the network? I am just trying to think about where service revenue could go with your installed base and as you grow the installed base. So that's kind of top line. And then within OpEx, should we sort of think of this?

I kind of just want to go a little deeper on your comments, Michael, about further room from here, if this is sort of a steady state of the business going forward, which is -- I mean, versus last year, sort of get where we are? I just want to understand how to think about modeling OpEx going forward.

Michael Battaglia: Yes. I will take the first part, Chris, and then Michael can take the second. So obviously, good question. I will answer it this way. We are seeing increasing utilization among the core group of assets where we have executed with the tools and analytics available to us. So call it the assets that have been installed in the last 18 months. And the new sites that we are putting in, so again, we raised about $20 million in equity in December. We committed to the majority of that being put in the ground in order to build out DC fast charging assets.

And as I pointed out in the deck, we are going to have a lot of those built by the end of the year. And we are very confident in the utilization that those sites are going to deliver. So to answer the question, overall, we see the overall network utilization increasing, but especially among the assets that we have installed, call it, in the last 18 months.

Christopher Pierce: Okay. Perfect. And then on OpEx?

Michael Bercovich: Chris, it is a very good question. Let me answer that. I think the key takeaway is that the vast majority of the structural cost actions are now behind us. Over the past 15 months, we fundamentally reset our operating expense base, and we believe that the current run rate is a good rep for the business going forward. You should expect operating expenses to remain relatively stable with some improvements as we move on because we are just not going to give up and we will continue looking. And then you will see some normal quarter-over-quarter fluctuations driven by timing and some investments in growth initiatives.

But as the revenue grows, right, our objective is essentially to leverage this existing cost structure rather than just grow operating expenses. So part of what we did is really reset the operating structure to help us to grow in the future with some additional changes that we plan to do in the next few quarters.

Christopher Pierce: Okay. Perfect. Can you just remind us what equipment you are putting in the ground? I know you had a factory outside of D.C. And then I think you had been using some third-party contracting on DC. Like what is happening with your prior production capabilities? And what equipment are you putting in the ground, like kind of where are you sourcing it from?

Michael Battaglia: Yes, sure. I will take that. So it's different as we talk about Level 2 versus DC. So let's start with Level 2 because that's what we were assembling in Maryland. So we took that production and we shifted it to third-party contract manufacturers, both here in the United States as well as overseas, in India. That is Blink product. So that's our IP, that's our software development, firmware development. It's just sitting in the hands of a third-party contract manufacturer to manage the supply chain, to snap them together and deliver it to our warehouses here in the U.S. So that's L2 or AC. Secondly, on DC, our strategy has not changed.

We are using third-party hardware to support our DC build-out as well as product sales. And that typically sits with 3 companies: Tellus Power, Kempower and Sinexcel.

Christopher Pierce: Okay. Perfect. And then just one last one for me. I guess it would be hard not to mention that we have seen companies in this space, across the space really talk about getting adjusted EBITDA positive in '23, '24 and that's sort of a reset. I guess, what's different or what are you seeing now that kind of gives you the confidence that you can sort of kind of talk about exiting this year flattish and positive adjusted EBITDA next year given sort of how volatile the environment has been that's sort of made it hard for people to sort of stick to their predictions?

Michael Battaglia: Yes, I will start with that. So I'm sure Michael will have some comments on this. So #1, just look at the progress we've made. I mean this isn't theoretical. We are not talking about this as a conceptual thing. We are demonstrating our progress to it. Adjusted EBITDA loss in Q2 of $2.2 million, we are not that far off. So right there, I think, is evidence -- tangible evidence that we mean what we say. And I think we have a pretty good track record over the last 18 months or so of delivering what we said we were going to deliver.

The other thing is, two, as we continue to build our repeat and recurring revenue mix, we can see what type of revenue we need to generate in order to get to profitability. So as we look out and we have, I would say, relatively conservative assumptions on product sales, that's how we're modeling this. We are not modeling this, as Michael said in his comments, based on the market recovering us. We are adjusting our business based on where the market is.

So when you combine all of those things, again, press -- continuing to press down on the operating expenses, the increased mix of repeat and recurring revenue and being conservative in the outlook for product sales, we're not saying this flippantly. We are demonstrating that we are getting it. So Michael, anything to add?

Michael Bercovich: Yes. Maybe just a couple of points, Chris. Let me say this, profitability is the priority. And the revenue reset you see was intentional. It's not demand driven. And cost structure has fundamentally changed. It's a completely, completely new company. And Blink is positioned to return to growth from a much healthier base, and that's what we can tell you today, and that's where we're driving.

Operator: We now hear from Ryan Pfingst with B. Riley.

Ryan Pfingst: First, could you give some more specifics around the decisions that you made that ultimately led to the revenue guidance reduction and the expected enhancement of gross margin?

Michael Battaglia: Yes. So you're talking about like when we talk about quality of revenue, just to be clear?

Ryan Pfingst: Yes, exactly. Yes.

Michael Battaglia: Yes. Sure, sure. So first of all, it really probably encompasses 3 things. So first of all, we're ensuring that our owned and operated chargers are optimized. And that means validating driver pricing, so what drivers pay for the electricity at our Blink-owned sites. And just as importantly, ensuring that we are procuring energy at the cheapest rate possible. So that's #1. Secondly, when customer contracts come up for renewal, we are evaluating the true cost of the business, not just the gross margin, but think about contribution margin impact. So if it make sense, we continue, if not, we walk away.

And there are a couple of areas that were meaningful from a revenue standpoint that we recently walked away from because the profitability was nonexistent. And we don't feel like that's an efficient use of capital or resources at Blink. And then finally, when we are evaluating hardware sales, we are considering the add-on opportunities that can create longer-term value. So things like whether or not there's a network subscription attached to it, an extended warranty purchase, a revenue share model perhaps. And these considerations help us understand the true margin contribution beyond just the hardware margin itself. So that's how we are thinking about the business now kind of every day we wake up.

Ryan Pfingst: Make sense. I appreciate that. And then just to clarify on EBITDA guidance. Should we think about the target being exiting the year at a breakeven run rate or breakeven for the fourth quarter?

Michael Battaglia: Michael, do you want to start?

Michael Bercovich: Yes, absolutely. So we're driving towards profitability to the end of the year and the drop to this record low of $2.2 million, just a good example. So we plan, again, as I said, profitability is the top priority. We plan to exit the year at a breakeven around that. And then we're building a plan now from where we are and those decisions that we're making right now to become profitable in 2027 with a much leaner, much more focused company and then derisking that as well.

Ryan Pfingst: Understood. Appreciate that. And then last one on EnergyConnect. Could you just dig into the battery storage strategy a little bit more and maybe some of the new opportunities that this can provide?

Michael Battaglia: Sure. So I think it's really interesting, I think, where Blink is and the opportunity that's available to us here. So we've been working on EnergyConnect for a while, and we are initially deploying it at our Blink-owned sites. So we're rolling it out. We're testing it against things like load balancing and some of the things that I mentioned in my comments, with the intent of trying to maximize the profitability opportunity at those Blink-owned sites. And then once we have validated that, we then get to bring it to the market. So there are kind of additional SaaS opportunities above and beyond just network fees that will -- that we can bring to customers. That's #1.

The second piece of it is then incorporating battery energy storage. And this is what I mentioned in the comments again is that when we look to early 2027, we should be able to bring battery energy storage capabilities underneath EnergyConnect. And that opens up a whole different set of opportunities for us in terms of, obviously, peak shaving, demand event mitigation and also providing energy back to the grid, which obviously is something that's top of mind for everyone. And I kidded around before and I've said, that used to be the conversation for EV charging. And now that whole conversation, thankfully, has shifted over to data center.

So we're no longer sort of the looming evil child out there. It's the data center. So we think that is a really big opportunity for us to leverage the EnergyConnect platform to be at the core of all of those things.

Operator: [Operator Instructions] Our next questioner is from Sameer Joshi with H.C. Wainwright.

Sameer Joshi: So I'd like to just dig in a little bit deeper on the EnergyConnect strategy. Is there a possibility for you to go back to already installed DCFC locations and upgrade those with batteries? Or is this only going to be for new installation coming in 2027?

Michael Battaglia: Sameer, thanks for the question. It's a great one. There is absolutely a big opportunity to retrofit existing DC fast chargers. And I think order of magnitude, as an example, we have sold upwards of 1,500 DC fast chargers into automotive dealers across the country. That's a pretty good -- and I think probably some of those dealers are struggling with things like demand charges, and that can represent a very interesting opportunity for us. So absolutely.

Sameer Joshi: That sounds wonderful. And then second question is about -- I think concluding your prepared remarks, you mentioned the balance sheet and optionality. I understand to the extent that you would be -- you want to deploy as many of your own chargers, and then also use some of this for the battery rollout. But what other options are on the table that you may be considering?

Michael Battaglia: Yes. So let me -- I'm sure Michael would like to jump in here, too. I'll start. So to me, this is a kind of a multi-faceted opportunity, I'll say, for capitalizing the company. So #1, we've talked about profitability on this call. And when we achieve profitability, we believe it's going to open up a world of options for us that perhaps aren't available to companies like us in the position we're in right now. So that's #1.

The second thing is that we believe that this strategy opens up an investment community to us that, again, hasn't been interested or visible, however you want to word it, and that when we start to show that our DC -- owned and operated DC fast charging footprint gives us a beachhead into this market that's real, we believe that the financing opportunities could be -- some very interesting ones could be available to us. So Michael, anything to add?

Michael Bercovich: Yes, absolutely. Thanks, Mike. Sameer, liquidity remains a key focus for us. We finished the quarter with approximately $34 million in cash, no debt, which we believe differentiates Blink from many of our peers. Our focus continues to be disciplined cash management, improving operating performance and reducing cash burn. Every transformation decision we have made over the last year have been centered around extending runway while building business capable of generating sustainable profitability. And that's one of the reasons why profitability, as Mike said, is such an important priority. A business that consistently generates stronger operating results, creates more strategic options, whether it's funding growth internally or accessing capital with lower cost when opportunity arise.

Our goal is to put Blink in a position where we have choices and where every financing decision is made from a position of strength rather than necessity.

Sameer Joshi: Understood. And I should congratulate you on the very successful cost reduction efforts. I mean it is really impressive what you have achieved over the last few quarters. And good luck with your 4Q breakeven EBITDA.

Operator: With all questions having been addressed from the Q&A, we turn the floor back over to your management.

Michael Battaglia: We appreciate all of you who joined Blink today for our second quarter announcement, highlighting significant improvements in our GAAP gross margin and adjusted EBITDA. These are critical KPIs that our management follows on our path to profitability as reflected in our updated guidance today. We look forward to keeping you updated. Reach out to the Investor Relations team and be well. Thank you.

Operator: This does conclude today's conference call. You may disconnect your lines at this time.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.