ChargePoint Holdings (CHPT -0.20%) is by far the leading provider of public level-2 charging for electric cars in North America with roughly 70% of the market. It's also expanding operations in Europe, and its overall growth strategy looks solid.
Its commercial clients -- fleet operators, shopping malls, universities, hospitals, corporate entities -- typically expand their business with the company as their needs increase, and its quality charging solutions are likely a key driver of this growth. These customers often offer charging as a perk or facility to patients, employees, customers, and so on. Over time, its top customers typically renew their software subscriptions and purchase additional charging ports from the company. This land-and-expand model contributes significantly to its revenue growth, as the chart below illustrates.
Its top 25 customers spent $7 million in total during the first quarter of ChargePoint's fiscal 2017. After eleven quarters, the total amount they had spent grew by 10.5 times to $74 million. And the company continues to add new customers, further contributing to its top-line growth.
Diverse revenue sources
ChargePoint started operations in Europe in 2017 and it now operates in 16 European countries. Its revenue from European operations also grew significantly last year. Currently, of the 174,000 ports that ChargePoint operates, around 51,000 are in Europe.
ChargePoint earns revenue by selling chargers as well as from software subscriptions and warranty services. Revenue from all these sources grew impressively last year.
Last year, ChargePoint earned 72% of its revenue from selling networked charging stations. Around 22% came from subscriptions, and the remaining 6% from other services, which include warranty services.
An attractive EV charging stock
Not only is ChargePoint a leading player in the electric vehicle (EV) charging space, but it is also growing rapidly. Even though the company isn't profitable yet, its growth strategy looks solid. With its huge network, ChargePoint is better-placed than its smaller peers -- like Volta, EVgo, or Blink Charging -- to benefit from the rising sales of EVs, and it has a long growth runway, as the mass transition to electric vehicles is still just getting started.
ChargePoint's stock is off roughly 60% from the peak it touched during the height of euphoria regarding EV stocks at the start of 2021. Its position as a leading player in a growing industry makes ChargePoint my favorite EV charging stock right now.