Wallbox Third Quarter 2026 Earnings Call - WALLBOX NV

Financial Performance:

• Q3 2026 total revenue was €24.2 million, down 1% sequentially and 32% year-over-year, falling short of the €29–31 million guidance range due to supply chain delays preventing backlog-to-revenue conversion.
• Gross margin came in at 36.5% (down from 38% in Q2), missing the 38–40% target primarily due to a lower product mix share of high-margin DC sales (3% of revenue vs. 7% in Q2).
• Adjusted EBITDA loss narrowed to €5.3 million, improving 32% sequentially and 24% year-over-year, landing within the guided range of €4.5–6.5 million despite revenue misses, driven by strict cost control.
• Operating expenses (labor) totaled €15 million, down 13% sequentially and 34% year-over-year.
• Cash and cash equivalents decreased to €10.4 million from €25.1 million in Q2, impacted by restructuring payments and working capital needs.
• Total debt stood at €186.7 million (long-term: €149.2 million; short-term: €37.5 million), with 80% being long-term debt.
• Inventory was €39.1 million, down 23% year-over-year, releasing cash for operations while matching component purchases to confirmed orders.
• Capex was light at €7.5 million for the quarter.

Guidance and Future Outlook:

• Q4 2026 revenue guidance is set at €29–31 million, assuming normalization of supply chains to convert existing backlog.
• Q4 gross margin is guided between 36% and 38%.
• Q4 adjusted EBITDA loss is projected to be between €3.5 million and €5.5 million (noted as "€3.5 billion" in transcript contextually implies €3.5 million).
• Management expects significant operating leverage upside as the €16.9 million backlog converts to revenue with a largely fixed cost base.
• Supply chain constraints are expected to be resolved over the next few months through new supplier agreements.
• Long-term goal is to re-accelerate growth by converting backlog into revenue and cash while maintaining cost discipline.

Business Segments and Product Lines:

• AC sales grew 8% sequentially to €17 million (approx. 70% of revenue); this segment holds the majority of the backlog (€14.7 million).
• DC (Fast Charging) sales declined 65% sequentially to €0.6 million due to delivery timing and supply constraints, though backlog stands at €2.2 million.
• Software, services, and other revenues remained stable at €6.6 million, representing 27% of total revenue.
• Launched new Pulsar Max generation in Europe featuring ISO 15118, RFID, and Ethernet connectivity, with broad availability from November.
• Secured a partnership with E-Node for October 2026 to enable third-party app integration and smart charging for Volvo chargers in Europe.
• Notable project milestone at Montreal Metropolitan Airport with 120 operational Pulsar Pro chargers and 48 planned using power-sharing technology.

Market and Competitive Landscape:

• Addressable market (excluding China) saw 2.7 million EVs sold in Q3, up 27% year-over-year.
• North American EV market sales dropped 36% year-over-year and 9% sequentially due to incentive removal; however, Wallbox achieved 15% sequential revenue growth by focusing on key clients.
• European EV market grew 35% year-over-year and 3% sequentially, supported by continued incentives and new affordable models.
• Rest of World (excluding China) saw strong EV sales growth of 93% year-over-year, though Wallbox maintains a limited footprint here, relying on distribution partners.
• Management emphasizes flexibility and a lean organizational structure to navigate market volatility.

Risks and Challenges:

• Primary challenge remains supply chain constraints causing a lag between robust order intake and revenue recognition.
• Inability to participate in selective DC tenders due to the ongoing settlement of the restructuring process (expected to resolve).
• North American market softness following the removal of EV tax credits and incentives.
• Cash flow pressure due to restructuring costs and the need for working capital to secure supply agreements.
• Gross margin pressure if high-margin DC sales do not normalize relative to AC sales mix.

Management Commentary and Tone:

• Tone was disciplined and optimistic regarding the backlog, framing the revenue miss as a "timing issue" rather than a demand issue.
• Management expressed confidence that the cost base is aligned and that significant P&L upside is locked in once the backlog converts.
• Highlighted progress on three strategic objectives: operational efficiency, completed restructuring, and re-accelerating growth.
• Emphasized that the €16.9 million backlog provides a predictable revenue stream and better leverage for supplier negotiations.

Analyst Questions and Answers:

• Note: Specific analyst questions were not explicitly detailed in the provided transcript text beyond the Q&A session introduction; the summary reflects management's direct responses to anticipated concerns regarding the backlog and margins.
• Management clarified that the revenue shortfall is solely due to operational supply chain hurdles, not a lack of demand, citing that order intake remained robust despite seasonal softness.
• Explained the gross margin decline was product-mix driven (lower DC share) rather than systemic cost inflation.
• Confirmed that warranty expenses were stable in absolute terms but had a higher proportional impact due to reduced revenue volume.

Other Key Points:

• Total backlog reached €16.9 million at end of September, up from €12 million in Q2, comprising €14.7 million AC, €0.65 million bidirectional, and €2.2 million fast charging.
• Geographic revenue split: EMEA contributed €17.5 million (72%), North America €6.5 million (27%), and APAC/South America €0.2 million (<1%).
• Financial statements are presented in IFRS format; non-IFRS measures are reconciled on the investor website.
• The company is focusing resources on key markets (Spain, France, Benelux, Germany, North America) while maintaining distribution channels for other regions.