Volta Inc. (NYSE:VLTA) Q1 2022 Earnings Conference Call May 13, 2022 8:00 AM ET
Company Participants
Katherine Bailon – Head of Investor Relations
Brandt Hastings – Interim Chief Executive Officer & Chief Revenue Officer
Drew Bennett – Executive Vice President of Network Operations
Francois Chadwick – Chief Financial Officer
Conference Call Participants
Pavel Molchanov – Raymond James
Andres Sheppard – Cantor Fitzgerald
Mark Delaney – Goldman Sachs
Matt Somerville – D.A. Davidson
Craig Shere – Tuohy Brothers
Operator
Good morning. My name is Rocco and I will be your conference operator today. At this time, I would like to welcome everyone to Volta, Inc.’s First Quarter 2022 Earnings Conference Call and Webcast. All participants’ lines have been placed in a listen-only mode to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session [Operator Instructions]. Please note, this conference is being recorded. Thank you.
I will now turn the call over to Katherine Bailon, Volta’s, Head of Investor Relations. Katherine, please go ahead.
Katherine Bailon
Good morning, and thank you for joining us on today’s conference call to discuss Volta’s first quarter financial results. This call is being broadcast over the web and can be accessed on the Investors section of our website at investors.voltacharging.com
With me from Volta on today’s call is Brandt Hastings, Interim CEO and Chief Revenue Officer; Francois Chadwick, Chief Financial Officer; and Drew Bennett, Executive Vice President, Network Operations.
We would like to remind you that, during this conference call, management will be making forward-looking statements, including statements regarding our expectations related to financial guidance, outlook for the sector and company and our expected investment and growth initiatives. Please note, these forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect the company’s views only as of today, and should not be relied upon as representative of views as of any subsequent date. And Volta undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.
These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the material risks and other important factors that could affect our financial results, please refer to the company’s filings with the SEC, including its most recent annual report on Form 10-K filed on April 15, 2022.
In addition, during today’s call, the company will discuss non-GAAP financial measures, which they believe are useful as supplemental measures of Volta’s performance. These non-GAAP measures should be considered in addition to, and not as a substitute for, or in isolation from, GAAP results. You will find additional disclosures regarding the non-GAAP financial measures discussed on today’s call in Volta’s press release issued this morning and its filings with the SEC, each of which is posted on the Volta Charging website.
The webcast of this call will also be available on the Investor Relations section of the company’s website.
With that, I will turn the call over to Brandt.
Brandt Hastings
Thanks, Katherine, and thank you everyone for joining us today. Let’s get right to it. We made continued progress against our strategy in Q1 with total revenue growing 77%, media revenue, up 73%, and total installed stalls growing 39% year-over-year. We signed multiple new strategic partnerships with top tier commercial properties, retail locations and global advertisers. We remain laser-focused on executing against four key goals for the remainder of 2022, which are continuing to accelerate revenue growth, increasing our connected stall count, turning on charge for charging in the second half of the year and enhancing public company infrastructure.
I want to take a moment to reinforce and clearly articulate the value that I see in Volta’s business model. EV adoption is occurring at a faster rate than ever before. More than half of new car buyers say their next car will be an electric vehicle.
The marketplace demands a solution that offers convenient public charging stations and provides real value. Volta delivers value to drivers, consumers, commercial properties and advertisers from day one.
Commercial properties can better influence foot traffic, advertisers can reach their target audiences seconds before they make a purchasing decision. And most importantly, EV drivers can seamlessly integrate on-the-go charging into their daily routines in the most convenient locations possible.
The combination of these integrated value propositions sets Volta apart in achieving immediate results. In this quarter, we made a lot of progress. We landed new site partner deals and expanded our contracts with others with heavy hitting, commercial properties in retail locations across geographies and industries.
We expanded our relationship with Six Flags where our charging and media model continues to resonate. The expansion deal is for an additional five sites and 85 incremental stalls. We also announced that we will install charging stations at Tanger year outlets in nine markets throughout the United States, unlocking two new geographies for Volta and expanding our reach in others.
Tanger will additionally leverage our media network nationally, regionally and locally as part of its omnichannel marketing partnership strategy. We also expect this partnership to grow in the coming quarters.
And then as previously shared, we closed our landmark expansion deal with Walgreens to install 1,000 DC fast charge installs at over 500 Walgreens throughout the United States. Our media sales team continues to accelerate revenue growth, while expanding our market reach across new and existing high-value advertising verticals, including consumer packaged goods, retail, automotive, telecom, financial services, entertainment and more.
In this quarter alone, we added new media partners like Showtime, Zoom, Bank of the West and T-Mobile to the platform and ran incremental campaigns for PepsiCo, Disney and Sephora, among others.
Nissan and Pulsar partnered with Volta to amplify their investments in the Super Bowl by running national campaigns across our media network. And HSBC and Bank of the West took advantage of the ability to effectively showcase their sustainability initiatives and influence consumer perception through advertising across our media streams.
As a reminder, our media business builds throughout the year, consistent with the sector, and Francois is going to talk more about how that all works later on this call. On the data and analytics front, we continue to secure business through our PredictEV product. This proprietary analytics software uses artificial intelligence to analyze local mobility, demographic, socioeconomic, business and site-specific data sets. And it empowers critical stakeholders, including government agencies, utilities, retailers, real estate developers, municipalities and more to make data-driven EV infrastructure planning decisions.
For example, in Q1, we worked with the state of Alabama, which used PredictEV to plan to deploy infrastructure intelligently, efficiently and equitably to boost the economic impact of electric vehicle charging across the state.
We continue to close deals like this across segments, and they set us up well for infrastructure investment and Jobs Act planning and software funds. And I’m proud to share that PredictEV was recognized as a finalist in Fast Company’s World Changing Ideas Awards.
From a public company infrastructure perspective, I would like to highlight two areas: First, our Board of Directors adopted a change to our governing document separating the roles of Chief Executive Officer and Chair of the Board. That is, the same person cannot hold both positions.
Second, through agreements with the company’s founders, the founders exchanged any interest they each had in Class B common shares, which have 10 votes per share for Class A common shares, which have one vote per share.
As set forth in more detail in our Form 10-K, including a number of assumptions relating to beneficial ownership, had they converted all their Class B interest into shares, the founders together would have had the ability to control some 67% of the voting power of the company’s stock. As a result of this agreement, together, they have the ability to control less than 16% of the voting power.
The world-class team at Volta is working hard on laser-focused execution of the four goals I mentioned earlier on the call, and I want to thank them for their hard work and dedication to our mission.
Since I first joined Volta, I’ve talked about the significant and strategic opportunity in electric mobility. We’re still in the early innings, and the market is growing rapidly. I believe that Volta has all the elements necessary to compete and win in this space.
Volta delivers value today, as it builds the EV infrastructure for tomorrow. Volta seamlessly integrates charging into an EV drivers’ daily routine, we influence EV driver and consumer foot traffic for commercial properties. We allow advertisers to message high-value consumers, seconds before they make purchasing decisions, and we generate revenue on day one, which translates into shareholder value.
We have a lot of work ahead of us. Still everything we’re doing, including our laser focus on executing against our four goals in 2022, is in service of our ultimate goal, which is cementing Volta as a leading player in electric mobility, and I’m incredibly optimistic about our progress.
With that, I’ll pass it to Drew Bennett for a breakdown of our installations pipeline and changes.
Drew Bennett
Thanks, Brandt. We think of our pipeline in three major stages. The top of the funnel comprised of any site or a set of sites we’re discussing with new or existing site partners. Then there’s the part of the funnel that is under technical evaluation. We and our partners are serious enough about a project that Volta has decided to invest technical resources that will address feasibility and contractual variables required before both parties can agree to sign off on the project. Finally, there’s the deployment pipeline, projects that are signed and clear to move through permitting and construction. On average, sites in this category are opened within one year.
During the first quarter, Volta signed three new master service agreements, which alone represent over 450 potential sites. This is an example of top-of-funnel activity. We now have three more partners whose portfolios are available to us, and we can begin the work to qualify specific projects.
In the first quarter, Volta added 775 projects worth 2,484 stalls into the technical evaluation section of the pipeline. We are now visiting these sites, determining feasibility, power runs and layouts. If a site design works for both us and our partner, we will be able to move forward with signature at that site. Executing the agreement is always a big milestone, which is why we focus on MSAs with large portfolios, so that our investment in technical design is more likely to pay off.
Also in the first quarter, Volta had the highest quarter ever for stall signing. So for the final section of our pipeline, the deployment pipeline, we closed the quarter at 3,727 stalls signed and ready to be deployed. Our guidance on incremental stall count this year remains at 1,700 to 2,000 stalls. In Q1, we installed 218 stalls. Thus, we have 1,632 stalls to install in the remaining three quarters of 2022 to meet the midpoint of that guidance. This is a significant ramp throughout the year, no doubt about it. You’ll see this ramp forecasted on the network development pipeline slide, a quarterly cadence of 350 in Q2, 450 in Q3 and the remaining 832 in Q4.
Our ability to scale our capacity this year will come down to how quickly we can scale our engineering and construction vendors. We have been and continue to onboard more local, regional and national vendors, training them up on our equipment and installation methodology, so that they can pump out volume with us at scale. We have 3,727 stalls worth of projects that are signed. We think we will be able to deploy at least half of those by the end of this year.
Now, I want to pass it over to Francois.
Francois Chadwick
Thanks, Drew. I’d like to take a moment to review our Volta mix money. We have four revenue buckets. Our primary bucket at 80% of our revenue in 2021 and 73% of our revenue in the first quarter is media. This bucket was previously called behavior and commerce. The way this works is we sell advertising space on our 55-inch digital media screens, which are an integral part of our charging stalls.
Let me outline it for you in its simplest terms, unit time’s price. We have a national network of these screens, 4,695 as of the end of the first quarter, and the screens of an associated amount of viable at season. In the media world, this is call impressions. The impressions we have to sell are determined not by how many drivers’ partner electric vehicles in the stall, but by how many people pass by those highly visible, large format screens and see the media on the screens. We intentionally placed our stations so that many people walking into places where the stations are like in front of grocery stores, movie theaters and malls, can see the media on the screens.
This is fundamental to Volta’s unique go-to-market proposition, which no other EV charging company offers. We are choosing sites that have high visitor traffic, then we choose parking stalls within those sites with high foot traffic within a few feet of the screen. This means our media enabled charging installs are located near the entrances to retail stores or venues with an activity. Each site available impression count is determined by a third-party auditor called Geopath, which is similar to Nielsen, but specific to our industry. The amount of impressions we can sell at any given time is calculated by adding our networks available screens to per stall currently.
Generally, our network shows out of eight second length, and we also support 15 second long apps. Our ads run 24 hours a day unless a site partner or jurisdiction Mondays otherwise. The price that we sell our impressions as a wide range. Think of those between $10 to $22 per CPM, which stands for cost per mile thousand. Our CPM pricing is very independent on the designated marketing area, also known as DMA and derived from the volume of stalls and advertising demand. While competitive markets go on at higher rates. Our delivery is dynamic based on the inventory available.
Another thing we wanted to share is that we look at the media business with an advertising orientated utilization lines called sell-through. It is different from the utilization length that measures how many people use our charging stations to receive electrons, which we largely still do not charge for. Our media sell-through, our media utilization has been improving over the last year from levels in the mid-teens to current levels of the mid-20s across our entire network.
Our sell-through in certain established markets is even higher. The media we offer is sold to advertising customers in one of three ways. Firstly, direct to national brand managers via Voltas Direct sales force, which is the largest bucket. Secondly, through third-party reseller channels, for example, PPOP, a shopping marketing dollar arm of Ahold Delhaize, USA; and finally, through a self-service channel called programmatic.
Buyers of our media could be intending to build brand awareness, a top of the funnel activity all the way down to what is called a call-to-action, where the success of the campaign is measured by the action of the viewer. The price paid for media impressions tends to scale with where they are in the funnel just described and by the specificity of the impressions purchased. When a buyer ask us to target a message to be seen by a subset of our network, that could be a subset by the time of day, day of the year, demographic, proximity to a specific retail establishment and so on, and then the price rises.
Our media customers span a broad segment of sectors of the economy, but this wasn’t always the case. Before COVID, the largest segment for Volta was automobile OEMs with EV products. This unique world event created a pause in the spending from this group, which led Volta to begin making inroads into the consumer packaged goods, CPG segment.
Today, as Brandt mentioned, we continue to expand our market reach to additional advertising verticals such as retail, telecom, financial services, entertainment and more. This diversification and the fact that our media network is placed mainly within the footprint of essential businesses like grocery stores, drug stores and other critical shopping locations, should why Volta to whether any economic downturn much better than other advertising participants.
Now that I have outlined how our media business makes money, I would like to shed light on what I feel is the most important dynamic to understand about the Volta business model? That is the way our business has further upside with no further capital outlay. The first two biggest levers are: one, we have the ability to sell more and more of our screening time for advertising; and two, we may sell it at a higher CPM.
Said another way, the two levers we may pull even if we were to invest no more capital or, one, higher CPM and two, higher sell-through. We expect to achieve higher CPM as we demonstrate the efficacy of our unique position in the marketplace to affect the actions of the ad view. We have a number of studies underway and over time, we expect to see our average CPMs move higher. And the second concept is that we expect to increase our sell-through from approximately the mid-20s to 50% or higher at maturity, depending on the DMA.
In addition to the leverage items, I have just outlined, all of which are at play without any additional capital outlay, I want to further the leverage discussion with the key — first key point of leverage, scale in the Volta media network. Scale does require additional capital, but it is already planned capital and here is how we think about it. For Volta’s advertising customer, geographic coverage is important. Media buyers are looking for exposure of a sufficient nature to a DMA.
At our current 4,695 screens, we are credible, as demonstrated by our marquee customer list that includes most major household brands. But you should know, national scale for the Volta media network is, we think 10,000 screens, such as scale would mark another milestone level for Volta and would enable us to participate in portions of available marketing dollars that perhaps we do not address today. We imagine achieving 10,000 screens in 2023, and this milestone will drive improved price and improved sell-through.
To summarize, the media business model and its leverage, let me offer a pro forma example. For 2021, our media revenue per average stall was just over $13,000 and our media revenue per average screen was just under $7,000. At a mature scale, we would expect our media revenue to achieve $23,000 per stall or $11,500 per screen, as we generally have two screens per stalls, which is a 77% increase from current levels due to the three leverage items just discussed.
The media business has thus far demonstrated solid repeat customers. In the last five quarters, 16 of Volta’s top 20 media customers have purchased advertising across multiple quarters. Seven of the top 20 media customers have bought in all five of those quarters. In the first quarter, five of Volta’s top six customers grew their spend with Volta by triple digits.
Now, moving on to our next revenue stream, revenue for electricity demand, also called charge for charging. Charging revenues were only 2% of 2021 total revenues. And given we are a charging company, this might strike you is perplexing. But let me shed some light on what is going on. Historically, we have not charged the driver for the electricity delivered to their vehicle. Please note, revenue for electricity delivered is our fourth lever of the increased revenue.
Let me walk you through it. Historically, our charging network was only AC chargers, and we did not charge for charge. We are now at the stage of our beta test rollout of charging for electricity delivered to the driver. Key milestones of this journey include the rollout of authentication and payment mechanism at the charger.
Volta now expects to begin charging for electricity, we delivered to the drivers and into the July, August 2022 timeframe. Once launched, our rollout will be gradual, starting with DC Fast charging stores initially and then in 2023, performing a retrofitting of AC charging stores at minimum cost for authentication and payments.
So back to the charging round the line, while it was 2% of 2021 revenues and in 2021 that consisted almost entirely of LCFS credits earned and then sold, starting in the second half of 2022, we expect an initial modest contribution from electricity delivery to the driver.
And in 2023, we expect this to be a more meaningful line item. At a material scale, we expect to have revenues from electricity to the driver of $2,000 to $3,500 for Level 2 charges, and $10,000 to $12,000 for DC per stalls per year based on our current product in the field with significant further upside as we deploy higher dispensing stations.
From a pricing strategy standpoint, we will unveil specifics as we unveil the functionality in the back half of 2022. We can share that we envision all pricing situations will be structured to yield a positive gross margin contribution. The exact margin level is to be determined and likely will be dynamic.
We would also point out the charging revenue line item should also see improvements to the LCFS credit revenues driven by an increasing mix of DC fast charging stalls from low numbers to a more meaningful percentage. Our maturity, Volta estimates annual LCFS credit revenue of $1,300 for an AC and $3,500 per DC stall in a state where LCSF credits are available.
Our next bucket of revenue is Network Intelligence. This revenue was just 1% of total revenues in 2021, but we call it out for its importance of an indirect support of our overall business model. This is our PredictEV product offering, which Brandt described earlier, sold as a Software-as-a-Service subscription to our utility and state customers. This is forecasted to be our highest margin product, and its recurring nature is also very attractive.
The fourth and final revenue stream is network development revenue. In 2021, network development revenues were 16% of total revenue. Network Development is revenue earned from site partners, who contract with us to install charging infrastructure on their behalf. This service revenue for our activities, such as site design, permitting, trenching and the installation of electrical infrastructure and has a gross margin profile similar to competitors who construct charging stations in the market.
Before I move into the specifics of our first quarter financials, I would like to touch on revenue seasonality. Overall, seasonality is quite pronounced. In 2021, we saw revenues as a percentage of the full year as follows: Q1, 15%; Q2, 21%; Q3, 26%; and Q4, 38%. For 2022, we expect the pattern to be approximately 10%, 20%, 30% and 40% of total revenue in each of the four quarters, respectively.
The driver of our seasonality is primarily our media business, which as we have discussed is the majority of our current revenue stack and which sees seasonality comparable to others in the advertising industry. A cohort of the 2021 advertising revenues from Clear Channel Outdoor, Facebook and DC [ph] displayed an average seasonal revenue breakdown of 19%, 23%, 25% and 33%. This occurs as most holidays fall in the fourth quarter, Halloween, Thanksgiving, Black Friday, Cyber Monday, Christmas and Hanneke being the primary ones.
The second factor is that budgeting cycles tend to conclude in the fourth calendar quarter, and most customers have what is called a use-or-lose budget system. For the first calendar quarter, marketing budgets are still being formulated and going through the approval process during the early months of the New Year.
In addition to these factors that shape media revenue patterns for Volta, we have a back half way into our network development pipeline, as we discussed earlier. This also suggests the network development quarterly revenue pattern we would expect for 2022 to be greater in the second half than the first half and greater in the fourth quarter than the third quarter.
We would also like to discuss certain sensitivity analysis with respect to how we think about our future state mature business model. Voltas AC stalls cost approximately $50,000 to build, including bill of materials as well as installation. Our DC fast stalls cost about double watt. Our forecasted maturity, we modeled that our charging revenue at Volta ought to achieve approximately $2,000 to $3,500 per AC stalls and $10,000 to $12,000 per DC stalls for electricity paid for by the drivers and idle fees.
But we expect charging revenue for DC stalls to be even higher as we deploy higher dispensing stations throughout the network. Further to this, we modeled a LCFS credit monetization at approximately $1,300 per AC stalls and $3,500 per DC stalls. Again, based on current types of stations in the network for the states that currently do so.
And lastly, to this, we also model an expectation that our media-enabled stores could generate approximately $23,000 per AC or DC stalls a year. Lastly, as we consider what a mature model for Volta looks like, we reflected on the gross margin profiles for each of our revenue streams and ultimately expect to be at levels achieved by mature companies in similar such businesses.
Now turning to our Q1 financial results. For the first quarter, we delivered in the top half of our outlook range for revenue with Q1 revenue growing at 77% year-over-year to $8.4 million. Q1 media revenue, which was formerly called behavior and commerce, grew 73% year-over-year to $6.1 million. We ended the quarter with an installed base of 800 sites, adding 81 new sites in the quarter. That is a Volta record.
Installed stalls were 2,548, up 39% year-over-year and up an incremental 218 stores from Q4. For the first quarter, we signed 844 sites, representing 1,947 stores. We exited the quarter with 1,443 sites and 3,727 stalls in our signed construction pipeline. Within these signings, we have a solid mix of both AC and DC stores.
During the fourth quarter, new brands for Volta’s media advertising platform included Showtime, Zoom, Bank of the West and T-Mobile and additional campaigns for PepsiCo, Disney, Aetna and Sephora. Our gross margin, excluding station depreciation for the quarter was negative 15.5% as compared to negative 5% gross margin in Q1 of 2021. The driver for this negative gross margin is due to our network development product as installation costs are recognized as incurred and in advance of milestones where revenue recognition can be recorded.
We forecast a 25% to 30% gross margin for the full year. Again, it should be clearly understood that with respect to our network development business, costs are recognized upfront have incurred, but revenue is recognized at certain milestones later than the cost. We anticipate that our gross margin percentage for such products to be aligned with market competitors that install and sell EV charging hardware.
SG&A expenses, excluding stock-based compensation, were $39.7 million for the first quarter as compared to $15.3 million, also excluding stock-based compensation in the prior year period. The increase year-over-year was due principally to increasing headcount and related costs and public company compliance costs. Including stock-based compensation and onetime expenses, SG&A was $56.2 million for the first quarter compared to $60.9 million in the prior year period. Our SG&A quarterly level of $40 million is not one we are satisfied with, so we are looking to closely monitor these costs, and we are taking actions to reduce them.
Adjusted EBITDA was $41.4 million loss for the first quarter of 2022 as compared to $15.9 million loss for the first quarter of 2021. Net loss was $48.1 million for the first quarter compared to a loss of $65.2 million in the prior year period. The company had cash and marketable security balance of $205 million as of March 31, 2022. As we have stated in prior public comments, Volta will be raising non-diluted capital to continue to accelerate the deployment of stalls in our network.
Management believes that from both a strategic and financial point of view, this is the most effective way to accelerate velocity and lower Volta’s overall cost of capital.
Volta is currently in discussions with multiple parties to structure and provide appropriate facility in the range of $250 million to $300 million and is confident that a transaction can be completed in the next few months.
Volta’s headcount at the end of the first quarter stands at 417 people. Our anticipated CapEx spend for 2022 is $140 million to $160 million to install our 2022 stations. Weighted average shares outstanding for the first quarter were $171.99 million.
Turning to our outlook for 2022. Based on current market conditions and input from our customers and team, we are reiterating our outlook for 2022 revenues to be in the range of $70 million to $80 million.
As we have stated previously, the seasonality of our revenue is a function of the media industry spending trends, tends to build throughout the calendar year, the first quarter the lightest and the fourth quarter the strongest.
Total incremental connected stalls in the range of 1,700 to 2,000 and total incremental connected sites to be in the range of 650 to 750 sites. For the second quarter ending June 30, 2022, we are guiding for revenue to be in the range of $13 million to $14 million.
Now, I’d like to wrap up and share the reasons we remain very excited about the future for Volta. Volta delivers the highest revenue per stall in the charging market. We also start to demonstrate the best operating leverage per stall in the charging market. Charging for electricity is coming in the second half of this year and will provide further revenue per store.
And finally, Volta sites are in the best high-traffic locations, and within those sites, our stalls are the ones closest to the entrances, putting Volta in an enviable position to add market-leading charging utilization.
With that, I would now like to open up the line for Q&A. I will be directing all questions.
Question-and-Answer Session
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] And today’s first question comes from Pavel Molchanov with Raymond James. Please, go ahead.
Pavel Molchanov
Thank you for taking the question. Let me start maybe high level first. Your initial stations in Europe were built just before the war started. And I’m curious, if given the context of $100 a barrel oil, plus the pending oil embargo against Russia? Are you seeing more engagement, more incoming interest from prospective site partners to deploy this infrastructure?
Francois Chadwick
Pavel, thanks for that. Francois here. That’s a very, very good question. And one that I — the answer — the short answer is, yes. We’re seeing a lot of demand. We’re actually landing very well in Europe. We’re seeing demand coming from the countries that we are already in. We’re in Germany and France and a couple of the adjacent countries.
But just with the larger macro environment, together with the policy push that is occurring in Europe, we’re seeing a lot of incoming demand from site partners and various other potential locations in multiple states across Europe. So the short answer to your question is yes, and it’s actually an absolute yes. And I hope to be able to say more in the next quarter or so. It’s a lot of demand. So thank you Pavel.
Pavel Molchanov
Turning to the US, August 1, I think you referenced this as the DOE deadline for states to submit their charging deployment plans. Do you know after August 1, how long will it take before the cash actually begins to flow to the businesses developing the charging sites?
Francois Chadwick
Yes, Pavel. Once again, Francois. Our expectation is this will be late into 2022 or early into 2023. That’s the latest we’re hearing and seeing from the folks that we are talking to when we’re in the meetings in D.C.
Pavel Molchanov
Okay. That’s helpful to know. And then finally, just to check a number that you mentioned in terms of guidance. Gross margin for the year as a whole between 25% and 35%, is that right?
Francois Chadwick
That is what we model to, yes. That is what we’re expecting to have that gross margin.
Pavel Molchanov
And given that you’re heavily negative in Q1, that implies that you’ll be averaging 40% to 50% for the rest of the year, correct?
Francois Chadwick
No, I think the comment was more along the lines of that is how we model out the mature market across the whole company. So there is still the infrastructure spend that has to occur in the front end of any project, but as we look at a mature project over its lifetime together with our stacking all of our revenues together, that’s the 25% to 30% guidance that we’ve given there, Pavel.
Pavel Molchanov
Okay. So that’s not for this year, that’s a long-term kind of steady state?
Francois Chadwick
That is a long-term steady state, yes.
Pavel Molchanov
Okay. And any what your gross margin might be?
Francois Chadwick
I have not given that yet.
Pavel Molchanov
Okay. All right. Fair enough. Thank you very much.
Francois Chadwick
Thank you, Pavel.
Operator
And our next question today comes from Andres Sheppard with Cantor Fitzgerald. Please go ahead.
Andres Sheppard
Hey, good morning, guys and congrats on the quarter. I just wanted to maybe follow-up regarding the state plan submissions that are due August 1, and then subsequently, the plant being confirmed by end of September. I’m just wondering, can you maybe give us a sense of what is Volta expecting or will be the sweet spot in terms of the funding that you might receive from the state plans? Thank you.
Brandt Hastings
Yeah. Thank you, Andres. And when you talk about state plans, you’re talking about the funding coming through the IIJA, just to confirm.
Andres Sheppard
That’s correct. Yes.
Brandt Hastings
Yeah. So a couple of things that I want to point out that I think are well worthwhile noting, there’s $7.5 billion that’s on the table as everybody knows, that split out into two main categories, is the $5 billion that sort of deployment across various different things included in that is the corridor charging. And then there’s $2.5 billion for community grand funds. So, when we look at our model and we’ve done sort of a rough estimate of the corridor charging, 25% approximately of our existing sales fall within that one-mile corridor, 25% of our sites were within that one-mile corridor. So, that is very attractive in that bucket.
And as we look and we model out where we’re going to add additional sites, this is going to be one of the points that we look to. Obviously, we’re not going to break our business model. We’ve always said that this is not — we’re not — we are one of the companies that the revenue from day one based on our business model, but a good indication of where we are sited right now on where we could say, 25% of our current sites are looking to be in that one-mile corridor. That’s currently in the proposed legislation.
Let’s not forget that this — like I said, this $2.5 billion of community funds. Now, once again, we are very, very well-placed for that because our model breaks that chicken and egg situation. So, we have the ability to put those stores in those locations where the — where we’re looking at the equity story and making sure that we’re putting stores in the ground to meet the needs of everybody. So, that is available to us because of the media that’s on our stations. And if the funding is bad and the CapEx will be reduced, so the ROI on a store like that is going to be very, very attractive to us. And the cost of repeating myself, that is a unique business model for the community and that matches what we do.
And the last thing I want to mention on this, Andres, is that we have our predict EV software tool. It’s not — this is not just an algorithm. This is actually a software tool that we use internally to actually make sure we put the stores in the right place. You also know that we sell it to third-parties. We sell it to utility companies. So, that’s just straight up validation that this is a tool that is — that works and is beneficial to everybody.
We’re in conversations with various different folks in D.C. We’re in the table. We’re in the rooms in D.C. and the software tool is getting a lot of attraction. So, as it sits there, those are the areas that we are definitely playing in, definitely something that is something, as I mentioned, at the cost of repeating myself, we’re in the room, we have into discussions.
To my prior answer, we expect the funding to be rolling out from — through the states, whether it’s the Department of Energy, Department of Transportation in the States late into 2022 and into 2023. So, Andres, I went through a lot of different things there, but hopefully, that lays out exactly how we, Volta, expect to play in this space, which is obviously a very exciting space right now.
Andres Sheppard
Yes, it does. I appreciate the insight there. And maybe for my follow-up, apologies if I missed this, but in terms of the partnership with Walgreens, right, the expectation to install about 1,000 DC chargers over 500 locations. And again, sorry if I missed this, but can you give us a sense of how that is progressing. I don’t know if you’ve disclosed these numbers, but in the past, you had said 12 to 18 months with the installation expectations. So, I’m just wondering where that stands? Thank you.
Brandt Hastings
Yes. So, I’ll — I can double down that the 12 to 18 months. That still stands. But let me pass it over to Mr. Drew Bennett to tell you a little bit about where we are in the whole lifecycle with Walgreens and the 500 stores, 1,000 stores, so Drew?
Drew Bennett
Yeah. Thanks, Francois. So we started adding new to the pipeline earlier this year. So that 12 to 18 months means that, some of the fast-moving ones will fall into this year. So I expect that I’m seeing as far as a lot see-through our pipeline.
So definitely, the first Walgreens projects will be happening this year. And I think the balance will come into the first half of next year. So it’s — yeah, it’s like a very large volume to kind of drop all at the same time.
Really exciting to us, and we’re working really closely with them to accelerate the upfront diligence and then, everything that comes following that with approvals and everything else. So yeah, really exciting, there’s a lot of potential there.
Obviously, agreement between the two parties to move forward. And what we expect is that, the first projects will be dropping definitely this year and then, the balance will fall into next year.
Andres Sheppard
Got it. Thank you very much and congrats again. I’ll pass it on.
Operator
And our next question today comes from Mark Delaney at Goldman Sachs. Please go ahead.
Mark Delaney
Yes. Hi. Good morning and thank you very much for taking my question and for all the details on the business. I was hoping to start on, the materials and operating environment. Some companies in the industry have seen pressure from rising operating costs and rising cost of components. I’m wondering if, both have seen anything along those lines. And if so, what steps you’re taking to mitigate those?
Drew Bennett
Yeah, Mark. Thanks for the question. Very similar to everybody else in the industry, we are seeing some slight up-tick in some of the costs, and there’s a little bit of pressure there. I think, I mentioned this in prior calls we built out a world-class supply chain team.
And so as we look at what we’ve got to — what we’re committed to in 2022 that definitely, we’ve already planned into that. There’s, a lot of purchases that have already been made or commitments that have already been made to make sure that we got ahead of that curve.
As I say, it’s there. We’re feeling some of the pressure. What we’re actually looking to start doing now is, to sort of plan into 2023, to see what we can do to get ahead of any issues that may start to hit us and impact us is similar to the rest of the industry.
So — but I do feel right now, I do feel right now that where we are, what we’ve got committed you’ve heard what the CapEx spend is looking like for 2022, that actually takes account of potentially any slight inflationary costs. And obviously, we’re also looking at making sure that, we’re watching all of our construction costs as well.
So the figures I gave you with respect to a totally fully laid in cost for an AC and a DC in my prepared remarks, that is installation costs, construction costs and the bill of materials. So not only do we look at the bill of materials, we’re watching construction installation as well very closely.
Mark Delaney
Yeah. That’s helpful. Thank you for the color Drew. My other question was a clarification on the gross margin comments and maybe a two-part question on gross margins. So first, the 25% to 30%, I wanted to clarify, is that excluding depreciation.
And then the second part of that, it sounds like that’s a longer-term target of 25% to 30%. So maybe you can talk about what’s changed relative to the SPAC investor presentation. I think the prior 2025 gross margin target was the upper 40% range. And so I’m trying to understand is, the 25% to 30% replacing that 47% target you had before? And if so, what’s the delta? Thanks.
Drew Bennett
Yeah. So for your first question, Mark, yeah, the 25% to 30% gross margin that excludes depreciation. So that’s how we model it out. And I think with respect to what you’ve seen in the SPAC model, what we see right now is we’ve spent more time looking at the model itself. We’ve spent more time investigating what those costs are, cost of service, cost of product. And what we’re giving you right now is our current estimate based on what we see for the future. So we feel a lot more — we’re in a place right now where we feel that this is a true figure that we can model to, true figure that I would suggest people were modeling to do so. But that’s where we believe we’re adding towards in a mature market.
Mark Delaney
Thank you.
Operator
And our next question today comes from Matt Somerville with D.A. Davidson. Please go ahead.
Matt Somerville
Thanks. A couple of questions. First, in your prepared remarks, you referred to the cadence of stall ads as you build throughout the year. And it just — it seems like a pretty big step almost quadrupling your stall adds from Q1 to Q4 in a market highly, highly characterized with skilled labor scarcity, shortages, handicapped the risk in getting to that number? And I guess, talk about how firm or lack thereof, a line of sight you actually have from going. I’m just rounding, but from 200 to 800 plus.
Francois Chadwick
Yeah. Thanks for that Matt, and I’m going to pass that one over to you, Bennett.
Drew Bennett
Sure. So indeed, it is a big growth moving on quarter-to-quarter, especially from a capacity and a delivery standpoint. But when we think about what do you need to deliver on numbers, especially in growth when it comes to being an infrastructure group. We think about it in kind of three ways. First, you need to have the opportunity, then you need to have the capacity to deliver on it, and then you actually have to deliver on it and execute.
So what we’re seeing in front of us right now is that we have the pipeline, you’ve kind of seen that laid out, like the signed opportunities are there for us to start moving through this deployment pipeline. We’ve spent the last couple of quarters building out our team and really increasing our capacity. And when you have an infrastructure pipeline, those don’t just immediately start delivery numbers; you have to get the projects going. So that seems been ramping up over the last two quarters. So we feel like we have the first half that aligns with our targets now, and we’ll start to see those results coming.
So the last thing that remains in front of us is execution. And it’s no small thing. Executing is very hard for a lot of the reasons that you mentioned, permitting utilities data play ball. And, of course, our site host, they don’t exist in a vacuum. They have tenants who sometimes also get to have a sign up on that and those permissions can, kind of, have variability.
So I think there are certainly opportunities for things to accelerate or push back. And the closer you get, you have more confidence, right? Like once we break ground, we’re confident something is going to happen along a pretty specific time line, up until then things could happen. So — but we feel really good about this. I mean any time you have growth, it’s difficult, but we put the team in a position to succeed and execute and I think we’re pretty confident about our expectations there.
Matt Somerville
And then as a follow-up, I wanted to see if — I believe you’ve done some piloting on charge for charge already. So I’d be curious as to what you’ve observed with respect to utilization rates they’re in on those pilots. You’ve given your utilization rate overall for the network in the past. I would be interested in that as well? And then I just want to be clear, did the whole stand up, if you will, of the charge for charge. Did that get further pushed to the right with some of that now not happening until 2023? Thank you.
Francois Chadwick
Matt, thanks for that and I’ll take this. So, I’ll start with your second point first, if you don’t mind. The charge for charge is not being pushed back. Our plans still are to have this up and live and running across our DC stores in the latter half of 2022. So, we’ve started and we’ve positioned in this as a July, August rollout. That is no different than anything we’ve said before, and I feel very comfortable with where we stand that you’re going to start to see this.
As we’ve always said, we’re going to start on our DC stores, and that’s going to kick it off. And as we roll into 2023, I think this may be where — you may have heard us talk about 2023. As we relate to 2023, that’s when we’re going to go back to our AC stores and do the retrofit for the AC stores. And then that — and that retrofit is very minor. It doesn’t cost much at all to actually do that work. So then eventually, as we roll through 2023, we’re going to start to see a full install of all of our stores across all of our sites. Our whole network will have charge for charge capability.
As it relates to your first question on the charge for charging utilization rates, we’ve not released any figures on that right now. What I can tell you is that we are — what we’re doing is as we look at the utilization rates, we’re actually sort of like doing the A/B testing. We do A/B testing across various different sites where we actually have some of them that have turned on the charge for charge, some of them that are not. And then we’re able to measure the delta in both the — not just the utilization, but also what is very critical and important to get right is the driver experience.
And that driver experience is what can and does lead to sort of utilization changes. But this is one of the — sorry, this is one of the areas where we are focused on, and we take the information we get and we turn it around and being able to make that driver experience in such a way that while that there is — there may be some changes on the slight get in the charge for charging and the utilization. That’s something we’re –we’ve modeled into. And as we said, when we look to a mature market, we’re looking for stability across that utilization.
One thing I just want to point out to make sure people understand is the utilization on the charge for charge. That’s something that we’re going to model very carefully as we roll out. But the utilization on the media, what we call the sell-through, that is not — that won’t change in any way, shape or form, whether or not we’ve turned on the charge for charging. That is the — we’ve talked about that being in the mid-teens going up to the mid-20 range right now. And as I mentioned in my prepared remarks, we’re looking at a mature market of about 50% utilization sell-through from media. Hopefully, that answers your question there, Matt.
Matt Somerville
Thank you, Brandt.
Operator
And our next question today comes from Craig Shere with Tuohy Brothers. Please go ahead.
Craig Shere
Good morning. Thanks for the incredible detail today. So, first question on the charge for charging. The guidance is that it will be a positive gross margin, but will the net cost to the end users still be a discounted rate versus most peers in the back of the parking lot?
Brandt Hastings
Craig, thanks for that question. And that is actually a very important question. It’s one I think that actually helps Volta a differentiated business model in various different ways, but this is one that’s key to us.
As we mentioned in the prepared remarks, we gave you the revenue that we expect on a mature market for the media per stall per screen. In our mind, that does allow us to have that differential pricing that we can put on the charge for charging as we look at turning the down across the whole network. But I’d say not only do we have the benefit of actually having the ability to have differentiated pricing from some of our peers and competitors who may be in the back of the parking lot. But one of the other things to also remember is that we have the sort of — one of the better locations in all of these sites where we’re very close to the front door of all of these, whether it’s the stores or the cinema or the sports stadiums, we’re very close to the entrance to that. That just makes it naturally attractive for the drivers to actually go there.
So I’ve had certain conversations where it sort of like you’ve got the most attractive stores, do you always have to be the lowest price? Well, we’ll model to what we feel is the right price for the right aspects and the driver experience. And just to go back to your question there, Craig, yes, we can have that differentiated pricing.
And let me just lastly tie that back to the prior question. The use of our differentiated pricing is a lever that we can use for utilization. And it’s a tool that we’re going to be interested in maximizing the total value that we can bring per store. And that total value is, once again, it’s price and its utilization. And so we feel very, very — we are in a very, very good position for pricing and utilization and the total overall use.
Q – Craig Shere
Thanks. And the guidance as far as expectations of total charging revenue, the LCFS included in that, what are your pricing assumptions there? And are you incorporating anything for EV?
Brandt Hastings
Yes. So the answer to the latter part is, yes. And when we’re looking at the current market for the credit, as with all of our peers and competitors, there’s definitely been a softening in the market for those credits. We’re modeling very similar to whatever our peers saying, which is in that, sort of, 110 to 130 range right now.
Q – Craig Shere
Okay. So I would assume there’s comfortable upside there. Other industries are modeling in the high 100s. So at least that has some potential. And I doubt about alternate — I’m sorry, alternate machine credit opportunities?
Brandt Hastings
Yes. So Craig, just — yes, there’s potential upside, and we always look to try and get the best we can. And we bundle accordingly to get the best price that we can. And the other credits as well, yes, we’re exploring any and all credits. We have a team that’s focused on all of these items, whether that’s credit, whether it’s grants, whether it’s incentives, we look for anything that could be available to us.
And at the same time, I just want to repeat, we have such a strong, strong business model that our revenue capability and capacity out of store also gives us the opportunity to make sure we only chase after those credits and as to those incentives that actually meet our business model and it still enable us to maximize revenue per stall.
Q – Craig Shere
Great. Thank you.
Brandt Hastings
Thank you, Craig.
Operator
Ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to management for final remarks.
Brandt Hastings
Thanks so much, operator. I’d like to close with thanking you all for your time today. And I’d also like to thank all of our employees for their contributions to Volta’s success, our shareholders for their support and our customers for their commitment. And we look forward to providing future updates on our progress as we drive forward. Thank you all.
Operator
Thank you. Ladies and gentlemen, this concludes today’s conference. You may now disconnect your lines. And we have a wonderful day.

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