ChargePoint Holdings, Inc.CHPT
ChargePoint Holdings, Inc. Fair Value Disclosure
Fair Value Measurements
The Company’s assets and liabilities that were measured at fair value on a recurring basis were as follows:
| Fair Value Measured as of January 31, 2023 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| ( in thousands) | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Money market funds | $ | 133,979 | $ | — | $ | — | $ | 133,979 | ||||||||||||||||||
| U.S. Treasury securities | — | 104,966 | — | 104,966 | ||||||||||||||||||||||
| Total financial assets | $ | 133,979 | $ | 104,966 | $ | — | $ | 238,945 | ||||||||||||||||||
| Fair Value Measured as of January 31, 2022 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| ( in thousands) | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Money market funds | $ | 254,716 | $ | — | $ | — | $ | 254,716 | ||||||||||||||||||
| Total financial assets | $ | 254,716 | $ | — | $ | — | $ | 254,716 | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Common stock warrant liabilities (Private Placement) | $ | — | $ | — | $ | 25 | $ | 25 | ||||||||||||||||||
| Contingent earnout liability recognized upon acquisition of ViriCiti (ViriCiti Earnout) | — | — | 5,993 | 5,993 | ||||||||||||||||||||||
| Total financial liabilities | $ | — | $ | — | $ | 6,018 | $ | 6,018 | ||||||||||||||||||
The money market funds were classified as cash and cash equivalents on the consolidated balance sheets and were within Level 1 of the fair value hierarchy. The aggregate fair value of the Company’s money market funds approximated amortized cost and, as such,
there were no unrealized gains or losses on money market funds as of January 31, 2023 and 2022. Realized gains and losses, net of tax, were not material for any of the periods presented.
Short-term investments, consisting of U.S. Treasury securities, were classified as available-for-sale on the purchase date and recorded at fair value on the consolidated balance sheets (see Note 4, Short-Term Investments, for more details).
As of January 31, 2023 and 2022, the Company had no investments with a contractual maturity of greater than one year.
The following table presents a summary of the changes in the fair value of the Company’s Level 3 financial instruments:
| Redeemable convertible preferred stock warrant liability | Private placement warrant liability | Earnout liability | ViriCiti Earnout liability | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Fair value as of January 31, 2020 | $ | (2,718) | $ | — | $ | — | $ | — | ||||||||||||||||||
| Change in fair value included in other income (expense), net | (73,125) | — | — | — | ||||||||||||||||||||||
| Fair value as of January 31, 2021 | $ | (75,843) | $ | — | $ | — | $ | — | ||||||||||||||||||
| Private placement warrant liability acquired as part of the Merger | — | (127,888) | — | — | ||||||||||||||||||||||
Contingent earnout liability recognized upon the closing of the reverse recapitalization | — | — | (828,180) | — | ||||||||||||||||||||||
| Contingent earnout liability recognized upon the acquisition of ViriCiti (“ViriCiti Earnout”) | — | — | — | (3,856) | ||||||||||||||||||||||
| Change in fair value | 9,237 | 63,746 | 84,420 | (2,137) | ||||||||||||||||||||||
| Reclassification of warrants to stockholders’ equity (deficit) due to exercise | — | 64,117 | — | — | ||||||||||||||||||||||
| Reclassification of Legacy ChargePoint preferred stock warrant liability upon the reverse capitalization | 66,606 | — | — | — | ||||||||||||||||||||||
| Issuance of earnout shares upon triggering events | — | — | 501,120 | — | ||||||||||||||||||||||
Reclassification of remaining contingent earnout liability upon triggering event | — | — | 242,640 | — | ||||||||||||||||||||||
| Fair value as of January 31, 2022 | $ | — | $ | (25) | $ | — | $ | (5,993) | ||||||||||||||||||
| Change in fair value included in other income (expense), net | — | (23) | — | — | ||||||||||||||||||||||
| Effect of foreign currency translation | — | — | — | 191 | ||||||||||||||||||||||
| Reclassification of warrants to stockholder’s equity (deficit) due to exercise | — | 48 | — | — | ||||||||||||||||||||||
| Contingent earnout liability increase upon satisfaction of earnings goal of ViriCiti (ViriCiti Earnout) | — | — | — | (1,283) | ||||||||||||||||||||||
| Transfer out of Level 3 upon achievement of earnings target for the earnout period | — | — | — | 7,085 | ||||||||||||||||||||||
| Fair Value as of January 31, 2023 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Redeemable Convertible Preferred Stock Warrant Liability, Private Placement Warrant Liability, and Earnout Liability
The fair values of the private placement warrant liability, redeemable convertible preferred stock warrant liability and earnout liability are based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The significant unobservable inputs used in the fair value measurements of the private placement warrant liability, the redeemable convertible preferred stock warrant liability and the earnout liability include the expected volatility and dividend yield. In determining the fair value of the private placement warrant liability, the Company used the Binomial Lattice Model (“BLM”) that assumes optimal exercise of the Company's redemption option at the earliest possible date. In determining the fair value of the redeemable convertible preferred stock warrant liability, the Company used the Black-Scholes Option Pricing Model (“Black-Scholes”) to estimate the fair value using unobservable inputs including the expected term, expected volatility, risk-free interest rate and dividend yield. In determining the fair value of the earnout liability, the Company used the Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis over the Earnout Period using the most reliable information available.
ViriCiti Earnout Liability
On August 11, 2021, the Company acquired all of the outstanding shares of ViriCiti Group B.V. (“ViriCiti”). The purchase price consideration included an earnout consideration contingent on meeting certain revenue targets through January 21, 2023. The fair value
of the ViriCiti Earnout liability was previously based on significant unobservable inputs, which represented Level 3 measurements within the fair value hierarchy. See Note 5, Reverse Capitalization and Business Combinations, for information on the valuation of the ViriCiti Earnout liability.
On January 31, 2023, the ViriCiti Earnout liability of $7.1 million, for the earnout period is based on the actual achievement of the revenue target and was subsequently paid in full on March 6, 2023 (see Note 18, Subsequent Events). Thus, the liability is no longer subject to fair value measurement and was accordingly transferred out of Level 3 fair value hierarchy, and is included in the “Accrued and other current liabilities” on the Company’s consolidated balance sheets.
Non-Recurring Fair Value Measurements
The Company has certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used.
Disclosure of Fair Values
The Company has financial instruments that are not re-measured at fair value including accounts receivable, accounts payable, and accrued and other current liabilities. The carrying values of these financial instruments approximate their fair values.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.