Greetings, and welcome to EVgo Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ted Brooks, Investor Relations for EVgo. Thank you. You may begin.

Welcome to EVgo's second quarter 2022 earnings call. My name is Ted Brooks and I head Investor Relations of the Company. Today's call is being webcast and can be accessed from the Investor section of our website at investors.evgo.com. The call will be archived and available there. And the Company's results, investor presentation, and a transcript of today's proceedings will be available at the Events & Presentations section of the Investors page after the conclusion of today's call. Joining me on today's call are Cathy Zoi, EVgo's CEO; and Olga Shevorenkova, the Company's Chief Financial Officer. Today, we will be discussing EVgo's latest financial results for the second quarter of 2022, followed by a Q&A session. During the call, management will be making Forward-Looking Statements regarding the 2022 fiscal year and our outlook for expected growth and investment initiatives. These forward-looking statements involve risks and uncertainties, many of which are beyond our control and could cause actual results to differ materially from our expectations, including among other risks and uncertainties, the severity and duration of the effects of the COVID-19 pandemic. These forward-looking statements apply as of today, and we undertake no obligation to update these statements after the call. For a more detailed description of factors that could cause actual results to differ, please refer to our Form 10-Q filed soon with the SEC and posted to the Investor section of our website. Also, please note that, certain financial measures we use on this call are on a non-GAAP basis. For historical periods, we provide the reconciliations of these non-GAAP financial measures to GAAP financial measures, and the investor presentation can be found on the Investors section of our website. With that, I'll turn the call over to Cathy Zoi, EVgo’s CEO. Cathy?

We're excited to be with you following another quarter of progress for EVgo. Our results for the second quarter. Together with the milestone partnership we recently announced with pilot and General Motors reinforce our leadership position in ultrafast EV charging. I want to touch on a few important themes this morning. One, EVgo continued operational success; two, our commercial progress, having signed a number of important partnerships; three, the work EVgo has been doing on the regulatory front to prepare for the massive investments the U.S. is making under the Infrastructure Investment and Jobs Act, and soon to become law Inflation Reduction Act. Four and finally, the importance of technology enabled innovation, and why it's critical to all the work EVgo does, including maintaining industry leading reliability and uptime standards. Let's start on the operational side. EVgo placed 170 stalls into operation across 17 states during Q2, bringing our total stalls in operation or under construction to 2,397. Through the first six months of this year, we have already eclipsed the number of stalls we placed into operation in all of 2021. The same is true for mobilized stalls, which for the first half of the year are already 15% above where they were for the entirety of 2021. At the same time, we continue to increase our active engineering and construction development pipeline, which is now over 3600. Notably, these numbers do not reflect the additional stalls for the pilot GM partnership announced a few weeks ago. Throughput was 10.1 gigawatt hours, an increase of 66% over the second quarter of 2021. Retail volumes were also encouraging and the revival of volumes among Uber and Lyft drivers where combined throughput was up 123% versus the second quarter of 2021, pointed the ongoing normalization of the post COVID period and…

Thanks, Cathy. I will start with a review of the key operational highlights before turning to our financial results, followed by some additional details on the financial impact of the Pilot Flying J and GM partnership we have recently announced. During the second quarter, we placed 170 stalls into operation in 17 different states. The number of stalls in the duration, or under construction was 2,397 at the end of the second quarter with a total of 1,937 stalls being in operation and 460 under construction. Our active engineering and construction development pipeline remains strong and increased from 3,344 stalls at the end of the first quarter to 3,669 at the end of the second. Operational stall growth has picked up pace year-to-date. Though some challenges remain on the utility side where we're still experiencing energization delays, we do affirm our total stalls in the duration are under construction guidance of 3,000 to 3,300 by the end of 2022. In July, we entered into a long-term supply agreement with Delta Electronics for the procurement of 350 kilowatt chargers. This agreement will provide chargers supplies through 2026 and covers a substantial portion of our obligations under the new eXtend deal with Pilot and GM. Network throughput was 10.1 gigawatt hours for the second quarter of 2022, an increase of 66% over the second quarter of 2021. We benefited from seasonality as more consumers took to the road during the spring and summer period, continued growth in EV sales and rebound in ride share. We expect the positive impacts of seasonality to continue through the summer. Our customer count increased by 18% versus the first quarter of this year, and is now 444,000. Turning to financial results. We reported $9.1 million of revenue in the second quarter of 2022, which is an…

[Operator Instructions] Our first question comes from the line of Gabe Daoud with Cowen.

Good morning, everybody. Thanks for all the prepared remarks. Cathy, and Olga, I guess, maybe just starting with revenue for this year. I know it's really inconsequential, just given how early days we are here. But can you give us a little color or confidence in the ability to deliver on the steep ramp that's implied for the rest of this year?

Yeah, sure, I mean Gabe, I would just sort of say we're tracking to our forecasts. So what we have taken account of is the obviously the growth in EVs over time, the number of EVs that are coming to market, the seasonality factors, and again, we did bake in a little bit of the PFJ deal, because we had we had been negotiating that like late last year. So we knew that that was going to be part of the scheme. Olga, anything you want to add to that.

Yeah, I would concur that some of the PFJ revenues and some of the fleet contractual revenues are scheduled to kick in closer to Q4 second half of the year. And that explains heavier loads on second half of the year versus what you see in the first year. But as we said, we're firm in our forecast, our guidance at this time, and we are tracking towards it.

And maybe as a follow-up, thinking about all the moving pieces on the policy front and eXtend, obviously, the Pilot deal pretty nicely to “eXtend” the network. But just curious, I guess how big of a contributor do you think extend becomes particularly as NEVI in some spots, I think, as you mentioned before, might not make the most sense to own and operate. So just trying to get a sense of how big eXtend can really be over the next call two to three years?

Yeah, well, Gabe, I think like you've identified the key thing, I mean, the policy objective of NEVI first and foremost is to get national coverage with the focus on corridors of rural areas. And again, I think you're a forecast as well, as far as the expectation is that that's going to be kind of a -- probably a slow burn for a while. So you know, having seen this coming we develop EVgo eXtend and negotiated the Pilot Flying J, which is substantial. And it's just -- it's a great addition to our overall -- like our overall product mix revenue, mix or earnings, all of that. So that's great. More probably is to come because Pilot Flying J is not the only entity that has quarters and rural presence with and -- many of those rural gas station operators and those folks remain interested in participating in electrification revolution and given EVgo's track record over 10 years of operating and network really, really well, we're very well placed to have that be a part of our business going forward. So as soon as we can tell you about specifics, we will. We look forward to talking about this -- this good business development things when they get in.

Our next question comes from the line of Andres Sheppard with Cantor Fitzgerald.

Maybe to follow-up a little bit from that first question. So in order to meet the guidance, the revenue guidance for later this year, can you talk about -- do you anticipate some seasonality in Q3 and Q4 quarter, should that be kind of heavier concentrated? Any insight there will be helpful.

So just to reiterate, our business -- core business, our retail revenues from the drivers who drive around the EVs, it depends on seasonality, but it also depends on EVs getting sold. So we do expect some of the seasonality actually, in the winter to the detriment but fall is neutral. So the summer seasonality is plane, but mostly we expect to continue to ramp up to have more customers in our network. Because you have seen we just signed up roughly 6,000 to 7,000 of new customers this quarter in our network, we expect that to continue to ramp up, and that driving more revenue through the end of the year. But most importantly why our forecast is more heavily loaded towards the second half of the year is the kicking of certain contractual revenues by the end of Q3 beginning of Q4, namely from the new PFJ contract and some of the fleet contractual deal. So there are two things happening at the same time.

So in regards to the NEVI program, I know this was just touched on, but so just to get it right. So you've already conducted sessions, it looks like here with 36 states submitted for more common -- states, the plans are expected to be confirming later in September. So I'm just wondering, is there any -- can you give us a sense of what we can expect from your contact with the states? I know you're not guiding any numbers, but maybe a little bit color? And then you've said Q4 '22 or Q1 '23. I'm just trying to see if we can maybe quantify that a little bit.

I'd like to provide quantities as well. It's actually, we can't do it. What we know is it's a big giant amount of money. That is absolutely going to start to flow with the earliest Q4 this year, but ultimate -- probably well and truly get moving in Q1 2023. The conversations -- what we're really excited about is that our experience and our best practices documents and our conversations, we become kind of a thought leader for state DOT's that are designing their programs. And that -- we're seen as not only experienced but willing to collaborate and cooperate, the fact that many of these programs are saying we're going to do competitive solicitations based on track record is really, really -- that puts EVgo in a kind of a pole position to get our share of that business where we where we want to go. So it's $5 billion over the next few years, it's -- they're going to be looking for companies that can actually deliver on what they say they are going to do. That is very much EVgo, we will be very, very active in bidding for that business. I mean, we do have to go ahead and bid for it, because these are competitive solicitations, but we’re really well placed. And if you look at the -- our history of being able to access runs from say Volkswagen's Appendix D settlement, again, that should give you some confidence that that's going to just give us more forward momentum going into the implementation of the NEVI program.

Our next question comes from the line of James West with Evercore. Please proceed with your question.

Hey, good morning, Cathy, Olga. So Cathy, kind of a big picture question for me. So we have seen the move in interest rates and equity prices. And clearly there has been a change in cost of capital for the industry. You have a good number of competitors and I'm using air quotes there, but good number of competitors that are not well capitalized and you guys are. And so, as you talk to customers, potential customers today and you think about -- and they think about how they want to build out or work with or partner with charging providers, has that economic reality started to set in yet? Are they understanding that there is going to be a shakeout here and there is winners, there is losers, the well capitalized guys are clearly the winners at this point, given the change in overall capital markets and cost of capital?

Yes, it's a great question, James. I think it's probably there in the background as part of our sort of all of our B2B business development conversations. I mean, the most important thing that we are finding is that, we have got a track record of delivery, right? Like, so we have got blue ribbon partnership they keep coming back for more. I mean, our partnership with GM just keeps going from strength to strength to strength, and Toyota coming across. I mean, all of those -- and those were sort of well in hand and we were delivering chargers that we needed to deliver and delivering customer benefits and everything else well before all of this -- sort of the capital markets that's completely just fluid. But I would say probably, I mean, if you're going to be doing business that the electrification to transportation is a -- there's lots of near term work, but it's a medium term gain. So if you're going to want to be partner with somebody that the chargers are going to be in the ground for 10 years or so, you're going to want to be partnering with somebody that's going to be able to manage those assets really, really well. I know whether we own them or whether you -- whether the counterparty owns them. And so I think, again, that's why Pilot got excited about partnering with us because of that track record. And the access to capital markets as the markets continue to grow, well capitalized companies will have compared to others. Sure, that's probably part of it. But that's probably more your world than our operational world, frankly. It's just -- it's part of the whole scheme that you want to be doing business with other blue chip providers and clearly you may go as you did that.

Right. Okay. Okay. That makes sense guys. Thanks for that. And then maybe one for Olga. Olga, as you were talking through the utilization for sort of cash flow examples. I'm just curious, and I think you are now fairly cash flow positive at certain locations or certain areas in California, maybe Brooklyn. But what do you need -- what is the utilization number or how should we think about the amount of EVs, or however you think about it that we need to be cash flow positive on a kind of a per location standpoint, so that we can understand kind of how to model out each location when we go cashflow positive and in our minds, you assign, obviously, value to those stalls.

Yeah, that's a good question. And the answer will be, it depends because the positivity of the cash flow in each location or in each geography, it depends on multiple factors. One is how many EVs are there, right? How many EVs are using EVgo as its network, what is the end user density? So how many people are using public charging versus charging at home? What -- do we have LCFS in this location or not, so California versus non-California. What is the energy cost environment and energy cost, they range from as low as $0.07 in Seattle to $0.40, $0.50 on the East Coast of the country. So you have a variety of different factors. So it is very difficult to pinpoint a specific EV concentration number but I'd say when you're probably looking at utilizations as low as single digit where you could start seeing cash flow positivity in some of the better markets with LCFS presence and with lower energy costs, and then you probably need low double digits for kind of medium markets. And then it goes up from there if you're really in the markets with high energy costs and no other incentives. So again, very hard to pinpoint to some averages just because of the -- because of the diverse nature of those other factors. But you're absolutely right. Some of the locations in California such as San Francisco, Los Angeles, Santa Barbara, some of the locations in high EV adoption areas such as Arizona, Phoenix is one of our high utilized markets right now. We also see down on the East Coast locations really kicking in, Connecticut has been quite an interesting market, has been really growing quite a bit in the last six months. So we see a pocket to bed. And we'll update the market with how that progresses. But again, hard to pinpoint a specific number within the country.

Our next question comes from the line of Ryan Greenwald with Bank of America.

Hey, team, it's [Alex Rabel] on for Ryan. Unfortunately, he's tied up on something else. Just two quick ones that I wanted to ask on eXtend specifically. I mean, how would you think -- I mean, I know you gave us some guidance sort of on the cash flow profile. How would you characterize the margin profile though, sort of bifurcating between the initial site development installation? And then sort of the recurring fee element to see if you can imply it on that?

Sure, so, let us first comment on our core business model. So we underwrite to a minimum of a double-digit unlevered pre-tax IRR over the life of the asset, because we put CapEx in and then we get investments back, so IRR is the concept we use to underwrite those. On eXtend, so on a specific PFJ deal which we announced recently, we're not disclosing the terms of that deal. But conceptually, when we assess eXtend deals, as deals we are working on for EVgo, we're looking at a minimum of a double-digit cash flow margin. So the over time of the contract, we are targeting to get a minimum of that. So that's a bit of a different concept because you don't have an -- you don't underwrite the CapEx, you don't underwrite the investment. You underwrite the overall cash flow generation to the company. So we use a bit of a different concept in here, but we keep the same quantum of what cash flow margin would like to get back.

And then just one more on the policy sort of landscape, if you will. I mean, how do you see the practicality of the, I guess, sort of revitalized section 30C tax credits, given location provisions, no direct pay. I mean, how do you guys see your capacity to sort of extract value from that going forward? Sounded positive, but curious if you can sort of parse that a little more for us?

I actually think it is positive. So while there's no direct pay, it's also it's also transferable, right? So the transferability of a tax credit is actually, if you look at other sectors, it's not a real heavy list. So I think that is real value for us. The locations are -- there are places where we really definitely want to take advantage of that value. Because it -- those are places that were not for the texture that we might not be terribly interested in building. So I think the provisions, the 30C provisions that are part of the inflation Reduction Act are likely to be material for us, enabling EVgo to extend our footprint and our reach over the next few years.

Our next question comes from the line of David Kelley with Jefferies.

Maybe a question on the step up and CapEx, just given your growth targets. Should we do assume the $44 million as the new baseline for future expansion? Or were there any kind of one time impacts in the quarter?

So there are no one time inputs on the quarter, it's a continuation of our efforts to build our network. We've guided the market to 3,000 to 3,300 stalls under construction or operational by the year-end. And when we come out with the guidance for 2023, we will give that guidance again, we think. So I think that’s what mostly drives the CapEx expense and that how many stalls we're about to build. What happens is probably emblematic of kind of this year ramp up. Going forward, we will update the market with more precise stall guidance. And that will help you understand how to -- how to model that CapEx. But I wouldn't necessarily assume that 44 million every quarter for the next five years is the right assumption, just because it will be driven by our decision on the pace at which we will expand the network.

And then maybe a question on PlugShare premium and recognizing it's still very early days. But can you talk about the reception to the subscription? And maybe how you're thinking about potential longer term penetration within that growing 2.5 million registered subscriber base?

I'll start with the macro, but like we're really excited about the PlugShare platform and as you kind of noted, all of the eyeballs that are on that. We spent a fair amount of time over the last 12 months investing in the build out of the platform and in its capability to increase advertising reach, right? So we've now got the -- we've actually increased -- and again, you need software infrastructure to be able to do that. And we've -- our investment in that software capability has increased the ability to add impression by 6X, which is really great. At the same time, it's a customer curated community. And we're mindful of the -- some of the people, some of the 2.5 million eyeballs may not want advertising. And so that's what the invention of PlugShare Premium was all about. So provision of the ad free environment for PlugShare users -- again, you're right. It's very, very early days. That was sort of at the behest of those, look, we love PlugShare, but we actually don't want to [see us] and we'll pay for that. So we will report back on the growth of that. But again, the early reception from that subset of the 2.5 million eyeball -- pairs of eyeballs that are using PlugShare has been very positive.

Yes. And I would add that we definitely saw an immediate ramp up measures in hundreds of people who had interest in trying that out. What we also can actually -- philosophically, what we would like to do with PlugShare premium market is to add different features and maybe increase the price of what that subscription is over time, but we will update the market when and how that will happen. It's a first step into the right direction here, and we already see positive response, meaning that people would like to use premium products and pay for it. How the premium product is going to be evolving overtime. We will continue to provide updates and we are personally quite excited about that.

Our next question comes from the line of Bill Peterson with JPMorgan. Please proceed with your question.

Yes. Thanks for taking my questions. Understanding maybe that CapEx -- absolute CapEx trends are not fixed, but how are you thinking about CapEx for stall trends? I know you have been experiencing an inflationary environment. I think, it's up quite a bit thus far this year, but as you look out and you have the eXtend program and all those things you're doing for GM, are you seeing any light at the end of the tunnel that some of these costs or cost per site should start coming down?

I'll take that. So we definitely see the first signs of easement. So, we are now looking at roughly $140,000, $145,000 per stall in the second half of the year and mostly the increases associated with inflation on the labor part. But we have started a wide range of different initiatives to abate that and find savings elsewhere obviously on the labor component. It's difficult, labor is not getting any cheaper, but we can be smarter than that. And some of the things we are doing -- we're getting better prices in equipment, we can say as much and we spoke about the new contract with Delta on our -- in our earnings script. So that is quite positive and we continue to see positive effect with the rising competition and just the rising volume in the industry. So we are beneficiaries of equipment prices being under pressure here. But we also -- how we organize and how we are thinking about what sites to build, we are prioritizing sites with shorter utility runs and we're working on a couple of other efficiency innovations. So for some of them, CapEx as we are looking at closer to midyear and next year, we already see quite a bit of improvement in CapEx, but we will update the market once we are close to that. So definitely see some percent of improvement here. But yet, what I would like to highlight that inflation -- high inflation environment continues to persist as everybody knows. So we will work hard to get savings in a couple of places, I mentioned, but at the same time we're under pressure for those pieces which are -- such as labor, for example and some other equipment other than actual charger where we are -- where we will continue to experience pressure from rising pricing environment.

Okay. Embedded in your full year guidance, I'm curious, were you expecting LCFS credits to trend I guess in the second half of the year? What is the -- I guess expectation?

Yeah, we're expecting them staying flat at what we traded. The last time we traded, we traded at roughly $95 per credit. And so we expect that to stay flat through year-end. Well, that's to be seen if that works out. We are exposed to volatility and LCFS expiration.

Our next question comes from the line of Noel Parks with Tuohy.

Just a couple of things I wanted to ask about. You were talking earlier about sort of your extensive testing program. I think you mentioned 250 chargers that you had tested. And I was just wondering for expanding set of equipment vendors out there, just wondering, from your perspective, are product capabilities, aligning pretty well with, I guess, both sort of what's most important to you guys on the demand side and also as far as pricing? Or interested in how you see kind of the current and coming crops of devices out there?

Yeah, I love this question. So, one of the reasons, we -- the EVgo’s Innovation Lab, it's just so important to success, I mean, make that available not only to all the OEMs, the car companies, but also to all the charging companies. So it ends up being as a central repository where we test all the chargers that are coming to the market, and we test them with all the cars that are either on the market or coming to the market. And it's a big giant, like ecosystem party to make sure that it's all going well. I will tell you that every single brand new car that comes to market -- like the automotive engineers are so excited about it, and they look really cool. But I would think if our CTO, if you asked him on this call, what percentage of cases does the car work with all the chargers right when it drives up to the lab the very first time, and that's damn near zero. So that lab table is really, really important to getting the ecosystem working. It’s nascent days of this ecosystem, and the car companies get it and the charging companies get it. We have -- when we selected a new supplier for our charging equipment, it goes through a rigorous process. First of all, they have to meet our specifications that we put out there in writing. And then they say, “yeah, we meet this.” And it's -- there's obviously, economics in that as well. Once they pass those hurdles, then we begin the testing procedures at our lab, which are the hardware, the firmware, the software, and then testing it with lots of different vehicles that are available. So that's all to say, we're very excited about the industry's capability to meet our exacting standards to be able to create great driver experiences. But that's a lot of hard work, it's our work, its work that we're involved in, and its work that we are partnering with both the vendors and the OEMs on, and it's going to stand us all in good stead for the electrification of transportation in America so that we can create happy drivers.

Right. Yeah, so important for adoption and acceptance going forward. I just want to turn for a moment to the multifamily market. You mentioned the California Award, and it does seem like one of the sleeping giants out there as far as the ultimate potential, not everyone has a garage. And I'm just curious is there any special characteristics for the contracts for that market that you're devising? Or is it pretty similar to any commercial setting?

No, this is -- what's unusual about this is that, look, 30% of Americans don't have access to home charging, because they don't have a garage, they don't have a carport or something like that. So, if you want the entire country to go electric as we do expect to happen over the next 10, 15, 20 years, then you're going to have to be able to -- have to provide access to this charging. The apartment dwellers, -- again, the rebuttable presumption had been that you've got to put L2 into these apartment buildings, right, because people are going to be there all night. But what's innovative about this approach in California is like, well, actually, what if there were convenient fast charging and then people could just come and do 15 to 30 minutes at a shot, maybe that's even more convenient and more cost effective than going in and trying to wire up parking garages in the apartment buildings. And so that's what's very, very exciting about this. So we are hopeful that we're going to be able to enable a new capacity for these apartment dwellers to conveniently charge near their homes quickly, and that -- we think that will work. So that's what that $3.6 million California advantage of that. And I'm sure the rest of the country is going to be watching for the results of that as they think too about how are we going to make it easy for apartment dwellers to charge close to home. And we don't necessarily want to go into the basements and garages where – or apartment that don't even have garages, right, which is another possibility. So we're excited about this good use of urban footprints to have fast charging rather than tying up whole parking lots for overnight charging.

Fascinating trend, it sort of game out exactly how all these different sectors are going to evolve.

Our next question comes from the line of Oliver Huang with Tudor, Pickering, Holt.

Just a quick follow-up to the CapEx question from earlier. Besides the ramp up being a primary driver, are there any details with respect to how much of the increase is due to increasing of charter output capacity size materially or any decreases to capital cost incentives or offsets when compared to recent quarters?

So let me just this clarify. There are no capital offsets in that $44 million number, it's a pure CapEx, so it's a growth CapEx. And all the capital offsets they sit in a different spot now on a cash flow statement. So every time you'll see us reporting CapEx that will be actual CapEx we put into the ground, so amount of equipment and labor, and whatnot. And so most of that ramp up is just acceleration of speed at which they’re constructed. And of course, we see a bit of a increase in the stall CapEx and that drive that a little bit. But if you really kind of dissect in between the price and quantity here, quantity is an overwhelming factor we construct at a much, much higher pace than we used to.

And I'll turn to my second question. Just with respect to OEM network revenue. Understand that this should really start to tick up in the back half the year and into next year from your earlier comments. But anything incremental to provide there to help us better understand the trajectory of that specific line item on a go forward basis. Just kind of gives them the imminent timing of various EV models coming to market that you all have agreements with. And would this inflow be something that we should expect to be fairly lumpy [indiscernible]?

So, let me clarify some of the earlier comments, they were related to be PFJ construct, which will be more ancillary revenue or eXtend revenue reported separately and some of the fleet contracts, which will fit in the fleet revenue. We do not expect much of a ramp-up on -- over OEM non-charging revenue. That's amortizations of Nissan and GM contract prepayments and they happen in. So it's complicated accounts in those, but those amortizations are tied to how many cars of those particular OEMs are on the road and overtime, they will ramp up. But we don't see much of lumpiness this year. So for near-term, you could just assume kind of a continuation of the trend you see now.

Our next question comes from the line of Maheep Mandloi with Credit Suisse. Please proceed with your question.

Hey, good afternoon. Maheep Mandloi here from Credit Suisse. Thanks for taking the questions here. Maybe quickly just on the charging volumes throughput to see ramp embedded in for Q3, Q4 here. Could you talk about that, like what's striving that visibility. We saw a 30% jump in Q2 sequentially. Is that something we should expect for Q3, Q4 as well? And or does it include any of the PFJ GWh as well? Thanks.

So do you mind clarifying what line items is your question about? Sorry, I missed it.

The throughput, the 50 to 60 GW hours for the full year, kind of implies almost 19 GWh run rate in Q3 and Q4.

Yes. So PFJ KWh won't be included in that, we expect some ramp up on both retail and fleet size that will drive the increase.

Got it. And then just that the revenue share is like, that’s somewhat flattish over year quarter-over-quarter, anything specific on that end? Like, could we see a similar mix shift in second half or what drove that flattish charging revenue here?

Well, charging revenues went 20% sequentially quarter-over-quarter, I wouldn't necessarily define it as flattish. Or maybe I do misunderstand your question, because we definitely saw quite a bit of a growth of charging revenue in Q2 versus Q1?

Yes. So -- no, my bad. I probably was looking at the ramp up, $5 million just for the charging revenues here. That's right.

Yes, it's roughly $5.2 million in Q2 versus $3 million, $4.4 million in Q1. So we do see it close to 20% of the ramp up.

And just last one for me on the regulatory credits. Any -- on the timing of the inventory sale I saw in Q2, any reason behind it? And do you have any more left in venture now?

Yes. So we don't have any more left. So the reason wasn't -- we spoke about it a couple of times, but it's a complicated matter, so very gladly will reiterate that. So we switched -- in the beginning of this year, we switched to a third-party handling our LCFS trade in. And that allowed us to recognize the revenue from LCFS as it occurs versus six months lag. So what we did previously, we would incur our KWh, get LTFS credits and trade them six months after the event of generating those KWh occurred. So we switched to immediate generation. So for the first six months of this year, we recognized the revenue as it occurs. So there will be kilowatt hours generated on California network translated into how many credits and we recognized revenue according to that. Plus, we had six months worth of credits -- of LCFS credits last from the old recognition method, and we just sold them in Q1 and Q2. So that's a one off event. Going forward you will only see LCFS recognition which is associated with kilowatt hour throughput in California, that particular quarter.

And just one last one from me, just on the bit long-term supply arrangement, could you just provide some more details around it or just help us understand what does it entail, fixed pricing, duration or any color would be appreciated?

Sure. It's mostly covers our PFJ deal for the first phase of this relationship, and the deal does assume a fixed price and covers up to 1000 charges, aka 2000 stalls, because there was a power shared configurations, and the deal is set up until 2026. We will be working on other supply agreements, and we will update the markets once that's possible. But that's the first in a row.

Our next question comes from line of Craig Irwin with Roth Capital Partners.

So Cathy, I wanted to ask specifically about your mix of 50 kilowatt units on the network. So it's around two thirds of the 2400 units that you have out there. Is there any commitment to installing 50 kilowatt units going forward? And can you maybe talk about the budget to retrofit these two higher capacity units? What sort of plans do you have? What's the capability of retrofitting these units at the existing sites that you have out there? And is there anything else we should consider when we look at these lower power units?

Yeah, thanks, Craig. Look, as I think I mentioned in our last call that -- what -- our standard configuration now is 350, right, because the market is moving to three -- is moving towards 350s. And we're skating ahead of the puck there. So we are putting in 350s everywhere. We have -- because we've been around for a dozen years, and again, when I got to EVgo nearly five years ago, 50 kilowatts was considered fast charging. It is still fast compared to obviously a Level 2 and a lot of people use it but we are moving ahead, we will only be putting in much higher power in ultrafast chargers. With respect to the replacement, it's interesting, in those old days when you would put in one 50 kilowatt charger or two 50 kilowatt chargers, you could do it without any sort of utility upgrade, any transformer upgrades, you often were on the host meter, because again, there was excess capacity at that site level. So that made those projects in some ways easier to do without getting the utilities involved in a major way. What we're doing now is we've looking across our entire network at -- in the cases where we have 50s, is it possible to upgrade them and upgrade efficiently? Or is it actually more effective and more efficient to simply go and build more capacity in those areas, and that's something that our COO, Dennis, is taking a good look at. We've got our program, which is the replacement program for old chargers where it's possible to do it. But if the replacement is going to involve lots and lots of utility up-scaling and digging and everything else in it, may be it just makes more sense to build more in a location with proximity. Because there are a number of -- people are still using the 50 kilowatt chargers with great delight and getting what they need. So, but it is -- we don't have a blanket, sort of -- we have guiding principles, which are -- we're only a selling higher power, we're upgrading, we're building really quickly. But we don't have a plan to retire those 50s, because they're still providing great utility to a lot of EV drivers across the country.

I mean, just for the record, you have 125 out of your fleet of just around 2,400. 125 of those 250 kilowatt units, that compares to electrify America just under 750. How long has this been a priority for you? Is this a priority that was established in the last year, or is this something that is a building piece of momentum as far as the installs?

I'm not sure what are you asking specifically about, what's been a priority?

So you have a much smaller proportion of your fleet in 350s, right? Then your primary competitor out there, your primary competitor has just under 750 kilowatt fast chargers out there, you have 125. I'm just wondering sort of when the priority move for EVgo to being committed to 350 kilowatt units, right, it's a very small piece of your fleet. And what portion of the pipeline or the capital budget out there is committed to 350? Is it everything, is it 10%?

The pipeline going forward is 350. We have -- since we've been in existence longer, we do have a number of -- we have 350s, 150s that are on -- that are in our network. And we're building, very quickly. So we are -- over time, we will have an increasing proportion, and just doing the math, of 350s relative to the 50s. So we are skating to where the puck is going to be and we're completely committed to it.

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Thanks everyone for joining us today. Go ahead Ted.

No. Go for it, Cathy. Sorry.

Thanks for joining us guys. And we're looking forward to keeping in touch. And if we don't speak before the next quarter, lots of progress ahead. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.