Revenues are a proxy for market share being captured. If you’re not growing revenues, you’re losing market share to competitors. In the case of large total addressable markets (TAMs), there may be enough opportunity to go around, which means there should be no impediments to growing fast except internal constraints. So, if the warehouse automation opportunity is a $100 billion blue ocean opportunity, then why is AutoStore (AUTO OL) seeing revenue growth stall?
Editor’s Note: All numbers in this article are USD unless stated otherwise.
AutoStore’s Revenue Growth
Double-digit revenue growth is nothing to sneeze at, but slowing from 78% growth in 2022 to 11% in 2023 is a dramatic decline. The CEO’s letter describes their progress in 2023 as “significantly outpacing the light AS/RS warehouse automation market, which declined 16 percent,” according to a “top-tier management consulting firm.” With only around 20 percent of the market penetrated, there is plenty of opportunity left to capture with $6.5 billion in pipeline orders. When successfully converted, these become “backlog” which stands at $447 million which is a good start to 2024. That all sounds good on paper, but as we’ve said before, the only ground truth is revenue growth. So, when AutoStore decided to stop providing guidance, analysts became understandably concerned.