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Reverse Recapitalization & Business Combinations
 9 Months Ended
Oct. 31, 2021
Reverse Recapitalization [Abstract]  
Reverse Recapitalization & Business Combinations Reverse Recapitalization and Business Combinations
Reverse Recapitalization
On February 26, 2021, Lightning Merger Sub, a wholly-owned subsidiary of Switchback, merged with Legacy ChargePoint, with Legacy ChargePoint surviving as a wholly-owned subsidiary of Switchback. As a result of the Merger, Switchback was renamed “ChargePoint Holdings, Inc.” Immediately prior to the closing of the Merger:
•all 22,427,306 shares of Legacy ChargePoint’s outstanding Series H-1 redeemable convertible preferred stock were converted into an equivalent number of shares of Legacy ChargePoint common stock on a one-to-one basis and an additional 1,026,084 shares of Common Stock were issued to settle the accumulated dividend to the Series H-1 redeemable convertible preferred stockholders of $21.1 million;
•all 160,925,957 shares of Legacy ChargePoint’s outstanding Series H, Series G, Series F, Series E, and Series D redeemable convertible preferred stock were converted into an equivalent number of shares of Legacy ChargePoint common stock on a one-to-one basis;
•all 45,376 shares of Legacy ChargePoint’s outstanding Series C redeemable convertible preferred stock were converted into an equivalent number of shares of Legacy ChargePoint common stock on a 1:73.4403 basis;
•all 130,590 shares of Legacy ChargePoint’s outstanding Series B redeemable convertible preferred stock were converted into an equivalent number of shares of Legacy ChargePoint common stock on a 1:42.9220 basis; and
•all 29,126 shares of Legacy ChargePoint’s outstanding Series A redeemable convertible preferred stock were converted into an equivalent number of shares of Legacy ChargePoint common stock on a 1:48.2529 basis.
At the Merger, eligible ChargePoint equity holders received or had the right to receive shares of Common Stock at a deemed value of $10.00 per share after giving effect to the exchange ratio of 0.9966 as defined in the Merger Agreement (“Exchange Ratio”). Accordingly, immediately following the consummation of the Merger, Legacy ChargePoint common stock exchanged into 217,021,368 shares of Common Stock, 68,896,516 shares were reserved for the issuance of Common Stock upon the potential future exercise of Legacy ChargePoint stock options and warrants that were exchanged into ChargePoint stock options and warrants, and 27,000,000 shares of Common Stock were reserved for the potential future issuance of the earnout shares.
In connection with the execution of the Merger Agreement, Switchback entered into separate subscription agreements (each a “Subscription Agreement”) with a number of investors (each a “New PIPE Investor”), pursuant to which the New PIPE Investors agreed to purchase, and Switchback agreed to sell to the New PIPE Investors, an aggregate of 22,500,000 shares of Common Stock (“PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $225.0 million, in a private placement pursuant to the subscription agreements (“PIPE Financing”). The PIPE Financing closed simultaneously with the consummation of the Merger.
Pursuant to the terms of a letter agreement the initial Switchback stockholders entered into in connection with the execution of the Merger Agreement (“Founders Stock Letter”), the initial stockholders surrendered 984,706 of Switchback Class B common stock shares purchased by NGP Switchback, LLC, a Delaware limited liability company (“Sponsor”) prior to the Switchback Public Offering on May 16, 2019 ( “Founder Shares”) for no consideration, whereupon such Founder Shares were immediately cancelled. Additionally, 900,000 Founder Shares, which were previously subjected to potential forfeiture until the closing volume weighted average price per share of the Company’s Common Stock achieved $12.00 for any ten trading days within any twenty consecutive trading day period during the five-year period following the Closing (“Founder Earn Back Triggering Event” and such Founder Shares the “Founder Earn Back Shares”), met the Founder Earn Back Triggering Event on March 12, 2021.
At the Closing, the Sponsor exercised its right to convert a portion of the working capital loans made by the Sponsor to Switchback into an additional 1,000,000 Private Placement Warrants at a price of $1.50 per warrant in satisfaction of $1.5 million principal amount of such loans.
The number of shares of Common Stock issued immediately following the consummation of the Merger was as follows:
Shares
Common stock of Switchback, outstanding prior to Merger39,264,704 
Less redemption of Switchback shares(33,009)
Less surrender of Switchback Founder Shares(984,706)
Common stock of Switchback38,246,989 
Shares issued in PIPE22,500,000 
Merger and PIPE financing shares (1)60,746,989 
Legacy ChargePoint shares (2)217,021,368 
Total shares of common stock immediately after Merger277,768,357 
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(1) This includes 900,000 contingently forfeitable Founder Earn Back Shares pending the occurrence of the Founder Earn Back Triggering Event, which was met on March 12, 2021
(2) The number of Legacy ChargePoint shares was determined by converting the 217,761,738 shares of Legacy ChargePoint common stock outstanding immediately prior to the closing of the Merger using the Exchange Ratio of 0.9966. All fractional shares were rounded down.
The Merger is accounted for as a reverse recapitalization under U.S. GAAP. This determination is primarily based on Legacy ChargePoint stockholders comprising a relative majority of the voting power of ChargePoint and having the ability to nominate the members of the Board of Directors, Legacy ChargePoint’s operations prior to the acquisition comprising the only ongoing operations of ChargePoint, and Legacy ChargePoint’s senior management comprising a majority of the senior management of ChargePoint. Under this method of accounting, Switchback is treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of ChargePoint represent a continuation of the financial statements of Legacy ChargePoint with the Merger being treated as the equivalent of ChargePoint issuing stock for the net assets of Switchback, accompanied by a recapitalization. The net assets of Switchback are stated at historical costs, with no goodwill or other intangible assets recorded. Operations prior to the Merger are presented as those of ChargePoint. All periods prior to the Merger have been retrospectively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Merger to effect the reverse recapitalization. Additionally, upon the consummation of the Merger, the Company gave effect to the issuance of 60,746,989 shares of Common Stock for the previously issued Switchback common stock and PIPE Shares that were outstanding at the Closing Date.
In connection with the Merger, the Company raised $511.6 million of proceeds including the contribution of $286.6 million of cash held in Switchback’s trust account from its initial public offering, net of redemptions of Switchback public stockholders of $0.3 million, and $225.0 million of cash in connection with the PIPE financing. The Company incurred $36.5 million of transaction costs, consisting of banking, legal, and other professional fees, of which $29.5 million was recorded as a reduction to additional paid-in capital of proceeds and the remaining $7.0 million was expensed in the condensed consolidated statements of operations.
Acquisitions
The Company acquired two companies in its third fiscal quarter ended October 31, 2021. The allocation of the purchase price consideration for each acquisition is preliminary and subject to revision as additional information about the fair value of assets and liabilities becomes available. Additional information that existed as of the respective acquisition dates, but at the time was unknown, may become known to the Company during the remainder of the remeasurement period, which is a period not to exceed 12 months from the respective acquisition dates. As of October 31, 2021, the Company continued to review the detailed valuation analyses to derive the fair value of assets acquired and liabilities assumed from the acquisitions, including developed technology, customer relationships and the related tax impacts; therefore, the purchase price allocations are based on provisional estimates and subject to continuing management analysis.
Acquisition of ViriCiti B.V.
On August 11, 2021, the Company acquired all of the outstanding shares of ViriCiti B.V. (“ViriCiti”) for $79.4 million in cash, subject to adjustments, as well as up to $7.7 million of additional earnout consideration contingent on meeting certain revenue targets through January 31, 2023 (“ViriCiti Earnout”). ViriCiti is a Netherlands-based provider of electrification solutions for eBus and commercial fleets with offices in the Netherlands and the United States. The acquisition is expected to enhance ChargePoint’s fleet solutions portfolio of hardware, software and services by integrating information sources to optimize electric fleet operations.
The acquisition of ViriCiti was considered a business combination and was accounted for under the acquisition method of accounting. The total purchase price was allocated to the net tangible and intangible assets acquired and liabilities assumed based on their respective fair values on the acquisition date and the excess was recorded as goodwill. The ViriCiti Earnout liability was valued using a Monte Carlo simulation valuation model using a distribution of potential outcomes over the earnout period based on the most reliable information available. Assumptions used in the valuation are a risk-free interest rate of 0.8%, volatility of 34% and the currently forecasted applicable revenue. The liability will be remeasured to fair value based upon the attainment against the revenue targets and changes in the fair value of earnout liabilities will be presented in the condensed consolidated statements of operations.
The Company incurred acquisition-related expenses of $2.2 million, which were recorded as general and administrative expenses in the consolidated statement of operations.
The following table summarized the preliminary purchase consideration (in thousands):
Amount
Cash consideration$79,415 
ViriCiti Earnout consideration (1)3,908 
Total purchase consideration$83,323 
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(1) Values are translated into U.S. Dollars at period-end foreign exchange rates.

The preliminary assets acquired and liabilities assumed in connection with the acquisition were recorded at their fair value at the acquisition date as follows (in thousands):

Amount
Cash and cash equivalents$623 
Accounts receivable, net1,248 
Other assets3,215 
Customer relationships17,683 
Developed technology6,558 
Goodwill62,703 
Deferred tax liabilities, net(3,378)
Other liabilities(5,329)
Total acquired assets and assumed liabilities$83,323 
The results of operations of ViriCiti are included in the accompanying consolidated statements of operations from the date of acquisition. ViriCiti’s results of operations since the date of acquisition were not material to the Company’s consolidated results of operations.
Acquisition of has•to•be gmbh
On October 6, 2021, the Company acquired all of the outstanding shares of has•to•be gmbh (“has.to.be” or “HTB”) for approximately $232.2 million, consisting of $130.1 million in cash, subject to further adjustments based on certain working capital positions and $102.1 million in the form of 5,695,176 shares of ChargePoint Common Stock valued at $17.92 per share on the acquisition date. Of these shares, 885,692, valued at $15.9 million, are held in escrow to cover indemnity claims the Company may make within eighteen months from the closing date. HTB is an Austria-based e-mobility provider with a European charging software platform. The acquisition is intended to expand the Company’s market share in Europe.
The acquisition of HTB was considered a business combination and was accounted for under the acquisition method of accounting. The total purchase price was allocated to the net tangible and intangible assets acquired and liabilities assumed based on their respective fair values on the acquisition date, and the excess was recorded as goodwill. The Company incurred acquisition-related expenses of $2.6 million, which were recorded as general and administrative expenses in the consolidated statement of operations.
The following table summarized the preliminary purchase consideration (in thousands):
Amount
Cash consideration$130,134 
Common Stock consideration102,057 
Total purchase consideration$232,191 
The preliminary assets acquired and liabilities assumed in connection with the acquisition were recorded at their fair value at the acquisition date as follows (in thousands):

Amount
Cash and cash equivalents$3,663 
Accounts receivable, net3,764 
Other assets4,259 
Customer relationships103,072 
Technology16,621 
Goodwill136,638 
Other liabilities(10,509)
Deferred tax liability, net(25,317)
Total acquired assets and assumed liabilities$232,191 

Supplemental Pro Forma Information
The following unaudited pro forma financial information summarizes the combined results of operations for the Company and HTB as if the companies were combined as of February 1, 2020 (in thousands):
Three Months Ended October 31,Nine Months Ended October 31,
2021202020212020
Revenue$66,571 $38,176 $168,736 $109,251 
Net Loss$(70,559)$(44,807)$(80,708)$(119,334)
The unaudited pro forma information above include the following adjustments to net loss in the pro forma periods presented (in thousands):
Three Months Ended October 31,Nine Months Ended October 31,
2021202020212020
An increase in amortization expense$(2,402)$(3,407)$(9,889)$(9,694)
An (increase) decrease in expenses related to transaction2,556 — 2,556 (2,556)
An (increase) decrease in tax provision(38)852 1,833 3,062 
Overall (increase) decrease in net loss116 (2,555)(5,500)(9,188)
ChargePoint net loss(69,442)(40,890)(72,092)(106,275)
HTB net loss(1,233)(1,362)(3,116)(3,871)
Pro forma net loss$(70,559)$(44,807)$(80,708)$(119,334)
The unaudited supplemental pro forma information presented for HTB is for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisitions taken place on the date indicated, or of the Company’s future consolidated results of operations. The supplemental pro forma information presented above has been derived from the Company’s historical consolidated financial statements and from the historical unaudited accounting records of HTB.
Pro forma results of operations for ViriCiti have not been presented because the effect of the acquisition was not material to the condensed consolidated statements of operations.
Goodwill and Intangible Assets
The following table summarizes the changes in carrying amounts of goodwill (in thousands):
Balance as of January 31, 2021$1,215 
Goodwill acquired with ViriCiti acquisition62,703 
Goodwill acquired with HTB acquisition136,638 
Foreign exchange fluctuations125 
Balance as of October 31, 2021$200,681 
Goodwill from these acquisitions represents the future economic benefits arising from other assets that could not be individually identified and separately recognized, such as the acquired assembled workforce. Goodwill is not deductible for tax purposes.
The following table presents the details of intangible assets (amounts in thousands, useful lives in years):
October 31, 2021
Cost (1)Accumulated Amortization (1)Net (1)Useful Life
ViriCiti
Customer relationships$17,683 $(390)$17,293 10
Developed technology6,558 (241)6,317 6
HTB
Customer relationships103,179 (703)102,476 10
Developed technology16,638 (185)16,453 6
$144,058 $(1,519)$142,539 
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(1) Values are translated into U.S. Dollars at period-end foreign exchange rates.
The fair value assigned to customer relationships was determined using the income approach and the fair value assigned to developed technology was determined using relief from royalty rate method, based on analysis of royalty rate licensing data of market participants. Amortization expense for customer relationships and developed technology is shown as sales and marketing and cost of revenue, respectively, in the consolidated statement of operations. The acquired intangible assets and goodwill are subject to impairment review at least annually on December 31.
Acquisition-related intangible assets included in the above table are finite-lived and are carried at cost less accumulated amortization. Intangible assets are being amortized on a straight-line basis over their estimated lives, which approximates the pattern in which the economic benefits of the intangible assets are expected to be realized. Amortization expense was $1.5 million for the three and nine months ended October 31, 2021. There was no amortization expense for the three and nine months ended October 31, 2020.
The Company recorded net deferred tax liabilities of $3.4 million on August 11, 2021 and $25.3 million on October 6, 2021, associated with the acquisitions of ViriCiti and HTB, respectively. Deferred tax assets and liabilities are netted and presented in the condensed consolidated balance sheets.