| Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies
Other than policies noted below, there have been no significant
changes to the significant accounting policies disclosed in Note 2
of the audited consolidated financial statements as of
January 31, 2021 and 2020 and for the years ended
January 31, 2021, 2020, and 2019.
Common Stock Warrants Liabilities
The Company assumed 10,470,562 publicly-traded warrants
(“Public Warrants”) and 6,521,568 private placement
warrants issued to NGP Switchback, LLC (“Private Placement
Warrants” and, together with the Public Warrants, the
“Common Stock Warrants”) upon the Merger, all of which
were issued in connection with Switchback’s initial public
offering and subsequent overallotment (other than 1,000,000 Private
Placement Warrants that were issued in connection with the closing
of the Merger) and entitle the holder to purchase one share of the
Company’s Common stock, par value $0.0001 (“Common
Stock”) at an exercise price of $11.50 per share. During the
three months ended April 30, 2021, 6,413,057 Public Warrants
and 4,347,712 Private Placement Warrants were exercised. The Public
Warrants are publicly traded and are exercisable for cash unless
certain conditions occur, such as the failure to have an effective
registration statement related to the shares issuable upon exercise
or redemption by the Company under certain conditions, at which
time the warrants may be cashless exercised. The Private Placement
Warrants are non-redeemable
The Company evaluated the Common Stock Warrants and concluded that
they do not meet the criteria to be classified within
stockholders’ equity. The agreement governing the Common
Stock Warrants includes a provision (“Replacement of
Securities Upon Reorganization”), the application of which
could result in a different settlement value for the Common Stock
Warrants depending on their holder. Because the holder of an
instrument is not an input into the pricing of a fixed-for-fixed
Contingent Earnout Liability
In connection with the Reverse Recapitalization and pursuant to the
Merger Agreement and Plan of Merger dated as of September 23,
2020 by and among the Company, Lightning Merger Sub Inc., and
Switchback (“Merger Agreement”), eligible ChargePoint
equity holders are entitled to receive additional shares of the
Company’s Common Stock upon the Company achieving certain
Earnout Triggering Events (as described in the Merger Agreement and
Note 9). In accordance with ASC 815-40,
The estimated fair value of the contingent consideration was
determined using a Monte Carlo simulation using a distribution of
potential outcomes on a monthly basis over the Earnout Period (as
defined in Note 9) prioritizing the most reliable information
available. The assumptions utilized in the calculation are based on
the achievement of certain stock price milestones, including the
current Company Common Stock price, expected volatility, risk-free
rate, expected term and dividend rate.
The contingent earnout liability is categorized as a Level 3
fair value measurement (see Fair Value of Financial Instruments
accounting policy as described above) because the Company estimates
projections during the Earnout Period utilizing unobservable
inputs. Contingent earnout payments involve certain assumptions
requiring significant judgment and actual results may differ from
assumed and estimated amounts.
Use of Estimates
The preparation of the accompanying condensed consolidated
financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions about future events.
These estimates and the underlying assumptions affect the amounts
of assets and liabilities reported, disclosures about contingent
assets and liabilities, and reported amounts of revenue and
expenses. Actual results and outcomes could differ significantly
from the Company’s estimates, judgments, and assumptions.
Significant estimates include determining standalone selling price
for performance obligations in contracts with customers, the
estimated expected benefit period for deferred contract acquisition
costs, allowances for doubtful accounts, inventory reserves, the
useful lives of long-lived assets, the determination of the
incremental borrowing rate used for operating lease liabilities,
the valuation of redeemable convertible preferred stock warrants
and common stock warrants, including Common Stock Warrants as a
result of the Merger, contingent earnout liability, the value of
common stock and other assumptions used to measure
stock-based compensation, and the valuation of deferred income
tax assets and uncertain tax positions. These estimates and
assumptions are based on management’s best estimates and
judgment. Management evaluates its estimates and assumptions on an
ongoing basis using historical experience and other factors,
including the current economic environment, which management
believes to be reasonable under the circumstances. The Company
adjusts such estimates and assumptions when facts and circumstances
dictate. Changes in those estimates resulting from continuing
changes in the economic environment will be reflected in the
financial statements in future periods. As future events and their
effects cannot be determined with precision, actual results could
materially differ from those estimates and assumptions.
Concentration of Credit Risk and Other Risks and
Uncertainties
Financial instruments that potentially subject the Company to
credit risk consist primarily of cash and cash equivalents and
accounts receivable. Cash and cash equivalents are held in domestic
and foreign cash accounts with large, creditworthy financial
institutions. The Company has not experienced any losses on its
deposits of cash and cash equivalents through deposits with
federally insured commercial banks and at times cash balances may
be in excess of federal insurance limits. The Company has not
experienced any losses on its deposits of cash and cash
equivalents.
Accounts receivable are stated at the amount the Company expects to
collect. The Company generally does not require collateral or other
security in support of accounts receivable. To reduce credit risk,
management performs ongoing credit evaluations of its
customers’ financial condition.
Concentration of credit risk with respect to trade accounts
receivable is considered to be limited due to the diversity of the
Company’s customer base and geographic sales areas. As of
April 30, 2021 and January 31, 2021, one customer
individually accounted for 11% and 16% of accounts receivable, net,
respectively. For the three months ended April 30, 2021 and
2020, there were no customers that represented 10% or more of total
revenue.
The Company’s revenue is concentrated in the infrastructure
needed for charging EVs, an industry which is highly competitive
and rapidly changing. Significant technological changes within the
industry or customer requirements, or the emergence of competitive
products with new capabilities or technologies, could adversely
affect the Company’s operating results.
Impact of COVID-19
In March 2020, the World Health Organization characterized
COVID-19 COVID-19, COVID-19
As a result of the COVID-19 non-essential
While the ultimate duration and extent of the COVID-19 COVID-19
Segment Reporting
The Company operates as one operating segment because its chief
operating decision maker, who is its Chief Executive Officer,
reviews its financial information on a consolidated basis for
purposes of making decisions regarding allocating resources and
assessing performance.
Fair Value of Financial Instruments
Fair value is defined as an exchange price that would be received
to sell an asset or paid to transfer a liability in the principal
or most advantageous market for the asset or liability in an
orderly transaction between market participants. Assets and
liabilities measured at fair value are classified into the
following categories based on the inputs used to measure fair
value:
•
(Level 1) — Quoted prices in active
markets for identical assets or liabilities that the Company has
the ability to access at the measurement date;
•
(Level 2) — Inputs other than quoted
prices in active markets that are observable for the asset or
liability, either directly or indirectly; and
•
(Level 3) — Inputs that are
unobservable for the asset or liability.
The Company classifies financial instruments in Level 3 of the
fair value hierarchy when there is reliance on at least one
significant unobservable input to the valuation model. In addition
to these unobservable inputs, the valuation models for Level 3
financial instruments typically also rely on a number of inputs
that are readily observable, either directly or indirectly. The
Company’s assessment of a particular input to the fair value
measurement requires management to make judgments and consider
factors specific to the asset or liability. The fair value
hierarchy requires the use of observable market data when available
in determining fair value. The Company recognizes transfers between
levels within the fair value hierarchy, if any, at the end of each
period. There were no transfers between levels during the periods
presented. The Company had no material non-financial assets non-recurring basis
The carrying values of the Company’s cash equivalents,
accounts receivable, net, accounts payable, and accrued and other
current liabilities approximate fair value based on the highly
liquid, short-term nature of these instruments.
Remaining Performance Obligations
Remaining performance obligations represents the amount of
contracted future revenue not yet recognized as the amounts relate
to undelivered performance obligations, including both deferred
revenue and non-cancellable contracted
Deferred Revenue
Deferred revenue represents billings or payments received in
advance of revenue recognition and is recognized in revenue upon
transfer of control. Balances consist primarily of software
subscription services and extended Assure maintenance services not
yet provided as of the balance sheet date. Contract assets, which
represent services provided or products transferred to customers in
advance of the date the Company has a right to invoice, are netted
against deferred revenue on a customer-by-customer basis. non-current
Accounting Pronouncements
The Company is provided the option to adopt new or revised
accounting guidance as an “emerging growth company”
under the Jumpstart Our Business Startups Act of 2012 (“JOBS
Act”) either (1) within the same periods as those
otherwise applicable to public business entities, or
(2) within the same time periods as non-public business non-public business
Recently Issued Accounting Standards Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial
Instruments — Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments, No. 2019-04.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):
Simplifying the Accounting for Income Taxes, step-up in
In August 2020, the FASB issued ASU 2020-06, Debt — Debt with
Conversion and Other Options (Subtopic 470-20) 815-40),
In October 2020, the FASB issued ASU 2020-08, Codification Improvements
to Subtopic 310-20 | 2. Summary of Significant Accounting
Policies
Use of Estimates
The preparation of the accompanying consolidated financial
statements in conformity with U.S. GAAP requires management to make
estimates and assumptions about future events. These estimates and
the underlying assumptions affect the amounts of assets and
liabilities reported, disclosures about contingent assets and
liabilities, and reported amounts of revenue and expenses. Actual
results and outcomes could differ significantly from the
Company’s estimates, judgments, and assumptions. Significant
estimates include determining standalone selling price for
performance obligations in contracts with customers, the estimated
expected benefit period for deferred contract acquisition costs,
allowances for doubtful accounts, inventory reserves, the useful
lives of long-lived assets, the determination of the incremental
borrowing rate used for operating lease liabilities, the valuation
of redeemable convertible preferred stock warrants and common stock
warrants, the value of common stock and other assumptions used to
measure stock-based compensation, and the valuation of deferred
income tax assets and uncertain tax positions. These estimates and
assumptions are based on management’s best estimates and
judgment. Management evaluates its estimates and assumptions on an
ongoing basis using historical experience and other factors,
including the current economic environment, which management
believes to be reasonable under the circumstances. The Company
adjusts such estimates and assumptions when facts and circumstances
dictate. Changes in those estimates resulting from continuing
changes in the economic environment will be reflected in the
financial statements in future periods. As future events and their
effects cannot be determined with precision, actual results could
materially differ from those estimates and assumptions.
Concentration of Credit Risk and Other Risks and
Uncertainties
Financial instruments that potentially subject the Company to
credit risk consist primarily of cash and cash equivalents,
short-term investments, and accounts receivable. Cash and cash
equivalents are held in domestic and foreign cash accounts with
large, creditworthy financial institutions. The Company has not
experienced any losses on its deposits of cash and cash equivalents
through deposits with federally insured commercial banks and at
times cash balances may be in excess of federal insurance limits.
Short-term investments consist of U.S. treasury bills that carry
high-credit ratings and accordingly, minimal credit risk exists
with respect to these balances.
Accounts receivable are stated at the amount the Company expects to
collect. The Company generally does not require collateral or other
security in support of accounts receivable. To reduce credit risk,
management performs ongoing credit evaluations of its
customers’ financial condition.
Concentration of credit risk with respect to trade accounts
receivable is considered to be limited due to the diversity of the
Company’s customer base and geographic sales areas. As of
January 31, 2021, one customer individually accounted for 16% of
accounts receivable, net. As of January 31, 2020, there were no
customers that accounted for 10% or more of accounts receivable,
net. For the years ended January 31, 2021, 2020, and 2019 there
were no customers that represented 10% or more of total
revenue.
The Company’s revenue is concentrated in the infrastructure
needed for charging EVs, an industry which is highly competitive
and rapidly changing. Significant technological changes within the
industry or customer requirements, or the emergence of competitive
products with new capabilities or technologies, could adversely
affect the Company’s operating results.
In December 2019, COVID-19 COVID-19 COVID-19
While the duration and extent of the COVID-19 COVID-19 COVID-19 COVID-19 COVID-19
While the Company has developed and continues to develop plans to
help mitigate the potential negative impact of COVID-19,
Segment Reporting
Operating segments are defined as components of an entity where
discrete financial information is evaluated regularly by the chief
operating decision maker (“CODM”) in deciding how to
allocate resources and in assessing performance. The Company
operates as one operating segment because its CODM, who is its
Chief Executive Officer, reviews its financial information on a
consolidated basis for purposes of making decisions regarding
allocating resources and assessing performance. The Company has no
segment managers who are held accountable by the CODM for
operations, operating results, and planning for levels of
components below the consolidated unit level.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments with an
original maturity of three months or less, when purchased, to be
cash equivalents. Cash equivalents may be invested in money market
funds. Cash and cash equivalents are carried at cost, which
approximates their fair value.
Restricted cash of $0.4 million as of January 31, 2021 and
2020 and $0.5 million as of January 31, 2019 relates to cash
deposits restricted under letters of credit issued in support of
customer agreements.
The reconciliation of cash, cash equivalents, and restricted cash
to amounts presented in the consolidated statements of cash flows
were as follows:
January 31,
2021 2020 2019
(in
thousands)
Cash and cash equivalents $ 145,491 $ 72,753 $ 205,238
Restricted cash 400 400 460
Total cash, cash equivalents, and restricted cash $ 145,891 $ 73,153 $ 205,698
Short-term Investments
The Company considers investments with original maturities greater
than three months and remaining maturities less than one year to be
short-term investments. The Company’s short-term investments
consist of U.S. treasury bills and are classified as available for
sale and reported at fair value, with unrealized gains and losses
recorded in accumulated other comprehensive income (loss). For
short-term investments sold prior to maturity, the cost of
investments sold is based on the specific identification method.
Realized gains and losses on the sale of short-term investments are
recorded in other income (expense), net in the consolidated
statements of operations.
Other-than-temporary Impairment
The Company evaluates its short-term investments with unrealized
losses for other-than-temporary impairment. When assessing
short-term investments for other-than-temporary declines in value,
the Company considers factors such as, among other things, the
extent and length of time the investment’s fair value has
been lower than its cost basis, the financial condition and
near-term prospects of the investee, the Company’s ability
and intent to retain the investment for a period of time sufficient
to allow for any anticipated recovery in fair value, and the
expected cash flows from the security. If any adjustment to fair
value reflects a decline in the value of the investment that the
Company considers to be “other than temporary,” the
Company reduces the investment to fair value through a charge to
the consolidated statements of operations and consolidated
statements of comprehensive loss. No such adjustments were
necessary during the periods presented.
Accounts Receivable, net
Accounts receivable are recorded at the invoiced amount and are
non-interest one-time
Beginning Additions Write-offs Ending
(in
thousands)
Year ended January 31, 2021
Allowance for doubtful accounts $ 2,000 $ 121 $ (121 ) $ 2,000
Year ended January 31, 2020
Allowance for doubtful accounts $ 3,124 $ 339 $ (1,463 ) $ 2,000
Year ended January 31, 2019
Allowance for doubtful accounts $ 1,316 $ 1,812 $ (4 ) $ 3,124
Inventories
Inventories are stated at the lower of cost or net realizable
value. Cost is computed using standard cost, which approximates
actual cost, on a first-in, first-out
Property and Equipment, net
Property and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation is computed using the
straight-line method over the estimated useful lives of the
respective assets, as follows:
Useful Lives
Furniture and fixtures 3
to 5 years
Computers and software 3 to
5 years
Machinery and equipment 3 to
5 years
Tooling 3 to
5 years
Leasehold improvements
Shorter of the estimated
Owned and operated systems 5 to
7 years
Leasehold improvements are amortized over the shorter of estimated
useful lives of the assets or the lease term. Expenditures for
repairs and maintenance are charged to expense as incurred. Upon
disposition, the cost and related accumulated depreciation are
removed from the accounts and the resulting gain or loss is
reflected in the consolidated statements of operations.
ChargePoint-as-a-Service
Internal-Use
The Company capitalizes qualifying internal-use internal-use internal-use
Leases
On February 1, 2019, the Company early adopted the requirements of
Accounting Standards Update (“ASU”) 2016-02,
Lessee
The Company determines if a contract is a lease or contains a lease
at the inception of the contract and reassesses that conclusion if
the contract is modified. All leases are assessed for
classification as an operating lease or a finance lease. Operating
lease right-of-use
The Company’s lease liabilities are recognized at the
applicable lease commencement date based on the present value of
the lease payments required to be paid over the lease term. As the
Company’s leases do not provide an implicit rate, the Company
uses its incremental borrowing rate to discount the lease payments
to present value. The estimated incremental borrowing rate is
derived from information available at the lease commencement date.
The Company’s ROU assets are also recognized at the
applicable lease commencement date. The ROU asset equals the
carrying amount of the related lease liability, adjusted for any
lease payments made prior to lease commencement and lease
incentives provided by the lessor. Variable lease payments are
expensed as incurred and do not factor into the measurement of the
applicable ROU asset or lease liability.
The term of the Company’s leases equals the non-cancellable
The Company’s lease contracts often include lease and
non-lease non-lease
The Company elected the package of practical expedients permitted
under the transition guidance, which allows the Company to carry
forward its historical lease classification, its assessment on
whether a contract is or contains a lease, and its initial direct
costs for any leases that existed prior to adoption of the new
standard. The Company has elected, for all classes of underlying
assets, not to recognize ROU assets and lease liabilities for
leases with a term of twelve months or less. Lease cost for
short-term leases is recognized on a straight-line basis over the
lease term.
Lessor
The Company leases networked charging systems to customers within
certain CPaaS contracts. The leasing arrangements the Company
enters into with lessees are operating leases, and as a result, the
underlying asset is carried at its carrying value as owned and
operated systems within property and equipment, net on the
consolidated balance sheets. Adoption of ASC 842 did not have a
material impact on the Company’s accounting as a lessor.
Impairment of Long-Lived Assets
The Company evaluates long-lived assets or asset groups for
impairment whenever events indicate that the carrying amount of an
asset or asset group may not be recoverable based on expected
future cash flows attributable to that asset or asset group.
Recoverability of assets held and used is measured by comparison of
the carrying amounts of an asset or an asset group to the estimated
future undiscounted cash flows which the asset or asset group is
expected to generate. If the carrying amount of an asset or asset
group exceeds estimated undiscounted future cash flows, then an
impairment charge would be recognized based on the excess of the
carrying amount of the asset or asset group over its fair value.
Assets to be disposed of are reported at the lower of their
carrying amount or fair value less costs to sell. There were no
impairments of long-lived assets for the years ended January 31,
2021, 2020, and 2019.
Business Combinations
The total purchase consideration for an acquisition is measured as
the fair value of the assets transferred, equity instruments
issued, and liabilities assumed at the acquisition date. Costs that
are directly attributable to the acquisition are expensed as
incurred and included in general and administrative expense in the
Company’s consolidated statements of operations. Identifiable
assets (including intangible assets), liabilities assumed
(including contingent liabilities), and noncontrolling interests in
an acquisition are measured initially at their fair values at the
acquisition date. The Company recognizes goodwill if the fair value
of the total purchase consideration and any noncontrolling
interests is in excess of the net fair value of the identifiable
assets acquired and the liabilities assumed. Determining the fair
value of assets acquired and liabilities assumed requires
management to use significant judgment and estimates including the
selection of valuation methodologies, cost of capital, future cash
flows, and discount rates. The Company’s estimates of fair
value are based on assumptions believed to be reasonable, but which
are inherently uncertain and unpredictable and, as a result, actual
results may differ from estimates. During the measurement period,
not to exceed one year from the date of acquisition, the Company
may record adjustments to the assets acquired and liabilities
assumed, with a corresponding offset to goodwill. The Company
includes the results of operations of the acquired business in the
consolidated financial statements beginning on the acquisition
date.
Goodwill
Goodwill represents the excess of the purchase price of an acquired
business over the fair value of the net tangible and identifiable
intangible assets acquired. The carrying amount of goodwill is
reviewed for impairment at least annually, in the second quarter,
or whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. As of January 31, 2021 and
2020, the Company had a single operating segment and reporting unit
structure. As part of the annual goodwill impairment test performed
in the second quarter, the Company first performs a qualitative
assessment to determine whether further impairment testing is
necessary. If, as a result of the qualitative assessment, it is
more likely than not that the fair value of the reporting unit is
less than its carrying amount, the quantitative impairment test
will be required. If the Company has determined it necessary to
perform a quantitative impairment assessment, the Company will
compare the fair value of the reporting unit with its carrying
amount and recognize an impairment charge for the amount by which
the carrying amount exceeds the reporting unit’s fair value,
limited to the total amount of goodwill of the reporting unit. The
carrying value of goodwill was $1.2 million as of January 31,
2021 and 2020, and no goodwill impairment has been recognized to
date.
Fair Value of Financial Instruments
Fair value is defined as an exchange price that would be received
to sell an asset or paid to transfer a liability in the principal
or most advantageous market for the asset or liability in an
orderly transaction between market participants. Assets and
liabilities measured at fair value are classified into the
following categories based on the inputs used to measure fair
value:
•
(Level 1) — Quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date;
•
(Level 2) — Inputs other than quoted prices in
active markets that are observable for the asset or liability,
either directly or indirectly; and
•
(Level 3) — Inputs that are unobservable for the
asset or liability.
The Company classifies financial instruments in Level 3 of the
fair value hierarchy when there is reliance on at least one
significant unobservable input to the valuation model. In addition
to these unobservable inputs, the valuation models for Level 3
financial instruments typically also rely on a number of inputs
that are readily observable, either directly or indirectly. The
Company’s assessment of a particular input to the fair value
measurement requires management to make judgments and consider
factors specific to the asset or liability. The fair value
hierarchy requires the use of observable market data when available
in determining fair value. The Company recognizes transfers between
levels within the fair value hierarchy, if any, at the end of each
period. There were no transfers between levels during the periods
presented. The Company had no material non-financial non-recurring
The carrying values of the Company’s cash equivalents,
short-term investments, accounts receivable, net, accounts payable,
and accrued and other current liabilities approximate fair value
based on the highly liquid, short-term nature of these
instruments.
Redeemable Convertible Preferred Stock Warrants
Warrants to purchase shares of the Company’s Series B, D, and
E redeemable convertible preferred stock are classified as
liabilities as the underlying redeemable convertible preferred
stock is considered redeemable and may require the Company to
transfer assets upon exercise. Redeemable convertible preferred
stock warrants are recorded within noncurrent liabilities on the
consolidated balance sheets. The warrants were recorded at fair
value upon issuance and are subject to remeasurement to fair value
at each balance sheet date. Changes in fair value of the redeemable
convertible preferred stock warrant liability are recorded in the
consolidated statements of operations. The Company will continue to
adjust the liability for changes in fair value until the earlier of
the exercise or expiration of the warrants, conversion of
redeemable convertible preferred stock into common stock, or until
the redeemable convertible preferred stock is otherwise no longer
redeemable. At that time, the redeemable convertible preferred
stock warrant liability will be reclassified to redeemable
convertible preferred stock or additional paid-in
Common Stock Warrants
Warrants to purchase shares of the Company’s common stock are
equity classified and recognized within additional paid-in paid-in
Revenue Recognition
On February 1, 2019, the Company early adopted ASU No. 2014-09.
•
Identification of the contract, or contracts, with a
customer;
•
Identification of the performance obligations in the
contract;
•
Determination of the transaction price;
•
Allocation of the transaction price to the performance
obligations in the contract; and
•
Recognition of revenue when, or as, the Company
satisfies a performance obligation.
Significant judgment and estimates are necessary for the allocation
of the proceeds received from an arrangement to the multiple
performance obligations and the appropriate timing of revenue
recognition. The Company enters into contracts with customers that
regularly include promises to transfer multiple products and
services, such as charging systems, software subscriptions,
extended maintenance, and professional services. For arrangements
with multiple products or services, the Company evaluates whether
the individual products or services qualify as distinct performance
obligations. In its assessment of whether products or services are
a distinct performance obligation, the Company determines whether
the customer can benefit from the product or service on its own or
with other readily available resources and whether the service is
separately identifiable from other products or services in the
contract. This evaluation requires the Company to assess the nature
of each of its networked charging systems, subscriptions, and other
offerings and how each is provided in the context of the contract,
including whether they are significantly integrated which may
require judgment based on the facts and circumstances of the
contract.
The transaction price for each contract is determined based on the
amount the Company expects to be entitled to receive in exchange
for transferring the promised products or services to the customer.
Collectability of revenue is reasonably assured based on historical
evidence of collectability of fees the Company charges its
customers. The transaction price in the contract is allocated to
each distinct performance obligation in an amount that represents
the relative amount of consideration expected to be received in
exchange for satisfying each performance obligation. Revenue is
recognized when performance obligations are satisfied. Revenue is
recorded based on the transaction price excluding amounts collected
on behalf of third-parties such as sales taxes, which are collected
on behalf of and remitted to governmental authorities, or driver
fees, collected on behalf of customers who offer public charging
for a fee.
When agreements involve multiple distinct performance obligations,
the Company accounts for individual performance obligations
separately if they are distinct. The Company applies significant
judgment in identifying and accounting for each performance
obligation, as a result of evaluating terms and conditions in
contracts. The transaction price is allocated to the separate
performance obligations on a relative standalone selling price
(“SSP”) basis. The Company determines SSP based on
observable standalone selling price when it is available, as well
as other factors, including the price charged to its customers, its
discounting practices, and its overall pricing objectives, while
maximizing observable inputs. In situations where pricing is highly
variable, or a product is never sold on a stand-alone basis, the
Company estimates the SSP using the residual approach.
The Company usually bills its customers at the onset of the
arrangement for both the products and a predetermined period of
time for services. Contracts for services typically range from
annual to multi-year agreements with typical payment terms of 30 to
90 days.
Networked charging systems revenue
Networked charging systems revenue includes revenue related to the
deliveries of EV charging system infrastructure. The Company
recognizes revenue from sales of networked charging systems upon
shipment to the customer, which is when the performance obligation
has been satisfied.
Subscriptions revenue
Subscriptions revenue consists of services related to Cloud, as
well as extended maintenance service plans under Assure.
Subscriptions revenue also consists of CPaaS revenue, which
combines the customer’s use of the Company’s owned and
operated systems with Cloud and Assure programs into a single
subscription. CPaaS subscriptions contain a lease for the
customer’s use of the Company’s owned and operated
systems unless the location allows the Company to receive
incremental economic benefit from regulatory credits earned on that
owned and operated system. Lessor revenue relates to operating
leases and historically has not been material. Subscriptions
revenue is recognized over time on a straight-line basis as the
Company has a stand-ready obligation to deliver such services to
the customer.
Other revenue
Other revenue consists of fees received for transferring regulatory
credits earned for participating in low carbon fuel programs in
approved states, charging related fees received from drivers using
charging sites owned and operated by the Company, net transaction
fees earned for processing payments collected on driver charging
sessions at charging sites owned by ChargePoint customers, and
other professional services. Revenue from regulatory credits is
recognized at the point in time the regulatory credits are
transferred. Revenue from fees for owned and operated sites is
recognized over time on a straight-line basis over the performance
period of the service contract as the Company has a stand-ready
obligation to deliver such services. Revenue from driver charging
sessions and charging transaction fees is recognized at the point
in time the charging session or transaction is completed. Revenue
from professional services is recognized as the services are
rendered.
Revenue Recognition (ASC 605)
During the fiscal year ended January 31, 2019, the Company
recognized revenue under ASC Topic 605, Revenue Recognition
(“ASC 605”) when persuasive evidence of an arrangement
existed, delivery had occurred, the fee was fixed or determinable,
and collectability was probable. Revenue for this period was
generally recognized net of allowances for returns and any taxes
collected from customers and subsequently remitted to governmental
authorities.
When a sales arrangement contained multiple elements, the Company
first determined whether the delivered items qualify as separate
units of accounting. A delivered item qualified as a separate unit
of accounting when it had value to the customer on a standalone
basis and when an arrangement included a general right of return
relative to the delivered item, delivery, or performance of any
undelivered items was considered probable or substantially in
control of the Company. The Company then allocated revenue to each
separate unit of accounting based on the relative selling price
method and using the established selling price hierarchy. The
selling price for a unit of accounting was based on its vendor
specific objective evidence (“VSOE”), if available,
third-party evidence (“TPE”) if VSOE was not available,
or best estimate of selling price (“ESP”) if neither
VSOE nor TPE was available. The Company generally utilized ESP.
The objective of ESP was to determine the price at which the
Company would transact a sale if the product or service were sold
on a standalone basis. ESP was generally used for new or highly
customized offerings and solutions or offerings not priced within a
narrow range, and it applied to a large proportion of the
Company’s arrangements with multiple deliverables.
The process for determining ESP requires judgment and considers
multiple factors that may vary over time depending upon the unique
facts and circumstances related to each deliverable.
Lessor Revenue
The leasing arrangements the Company enters into with lessees are
operating leases. The Company recognizes operating lease revenue on
a straight-line basis over the lease term and expenses deferred
initial direct costs on the same basis.
Operating lease revenue is classified as subscriptions revenue in
the Company’s consolidated statements of operations.
Operating lease revenue and the future maturities of lease payments
from lessees was not material to the consolidated financial
statements for all periods presented.
Remaining Performance Obligations
Remaining performance obligations represents the amount of
contracted future revenue not yet recognized as the amounts relate
to undelivered performance obligations, including both deferred
revenue and non-cancelable
Deferred Revenue
Deferred revenue represents billings or payments received in
advance of revenue recognition and is recognized in revenue upon
transfer of control. Balances consist primarily of software
subscription services and extended Assure maintenance services not
yet provided as of the balance sheet date. Contract assets, which
represent services provided or products transferred to customers in
advance of the date the Company has a right to invoice, are netted
against deferred revenue on a customer-by-customer
Cost of Revenue
Cost of networked charging systems revenue includes the material
costs for parts and manufacturing costs for the hardware products,
compensation, including salaries and related personnel expenses,
including stock-based compensation, warranty provisions,
depreciation of manufacturing related equipment and facilities,
amortization of capitalized internal-use
Cost of subscriptions revenue includes network and wireless
connectivity costs for subscription services, field maintenance
costs for Assure to support the Company’s network of systems,
depreciation of owned and operated systems used in CPaaS
arrangements, amortization of capitalized internal-use
Cost of other revenue includes costs for the Company’s owned
and operated charging sites, as well as costs of environmental and
professional services.
Costs to Obtain a Customer Contract
Sales commissions are considered incremental and recoverable costs
of acquiring customer contracts. Beginning at the Company’s
adoption of ASC 606 on February 1, 2019, incremental and
recoverable costs for the sale of cloud enabled software and
extended maintenance service plans are capitalized as deferred
contract acquisition costs within prepaid expenses and other
current assets and other assets on the consolidated balance sheets
and amortized on a straight-line basis over the anticipated benefit
period of five years. The benefit period was estimated by taking
into consideration the length of customer contracts, renewals,
technology lifecycle, and other factors. This amortization is
recorded within sales and marketing expense in the Company’s
consolidated statements of operations. The sales commissions paid
related to the sale of networked charging systems are expensed as
incurred.
The Company elected the practical expedient that permits the
Company to apply ASC Subtopic 340-40, 340-40
Changes in the deferred contract acquisition costs during the years
ended January 31, 2021 and 2020 were as follows:
(in thousands)
Balance upon adoption of ASC 340 on February 1, 2019 $ 2,189
Capitalization of deferred contract acquisition costs 2,318
Amortization of deferred contract acquisition costs (675 )
Balance as of January 31, 2020 $ 3,832
Capitalization of deferred contract acquisition costs 2,908
Amortization of deferred contract acquisition costs (1,206 )
Balance as of January 31, 2021 $ 5,534
Deferred acquisition costs capitalized on the consolidated balance
sheets were as follows:
January 31
2021 2020
(in thousands)
Deferred contract acquisition costs, current $ 1,550 $ 1,013
Deferred contract acquisition costs, noncurrent 3,984 2,819
Total deferred contract acquisition costs $ 5,534 $ 3,832
Research and Development
Research and development expenses consist primarily of salary and
related expenses, including stock-based compensation, for personnel
related to the development of improvements and expanded features
for the Company’s products and services, as well as quality
assurance, testing, product management, amortization of capitalized
internal-use
Stock-based Compensation
The Company measures and recognizes compensation expense for all
stock-based awards, including stock options and restricted common
stock, granted to employees and directors based on the estimated
fair value of the awards on the date of grant. The fair value of
each stock option award is estimated on the grant date using the
Black-Scholes option pricing model. The Black-Scholes option
pricing model requires the input of highly subjective assumptions,
including the fair value of the underlying common stock, the
expected term of the option, the expected volatility of the price
of the Company’s common stock, risk-free interest rates, and
the expected dividend yield of the Company’s common stock.
The assumptions used to determine the fair value of the awards
represent management’s best estimates. These estimates
involve inherent uncertainties and the application of
management’s judgment.
The Company amortizes the fair value of each stock award on a
straight-line basis over the requisite service period of the
awards. Stock-based compensation expense is based on the value of
the portion of stock-based awards that is ultimately expected to
vest. As such, the Company’s stock-based compensation is
reduced for the estimated forfeitures at the date of grant and
revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates.
Advertising
The Company expenses the costs of advertising, including
promotional expenses, as incurred. Advertising expenses for the
years ended January 31, 2021, 2020, and 2019 were not material.
Warranty
The Company provides standard warranty coverage on its products for
twelve months, providing parts necessary to repair the systems
during the warranty period. The Company accounts for the estimated
warranty cost as a charge to networked charging systems cost of
revenue when revenue is recognized. The estimated warranty cost is
based on historical and predicted product failure rates and repair
expenses. Warranty expense for |
