Recently, Plug Power CEO Andy Marsh said during the company’s six-city tour that the company’s annual revenue could grow to $500 million by 2020. At first glance, it seems like a far-fetched goal considering the fuel cell company generated only $9.4 million revenue in the first quarter of this year. If you take a closer look, Andy Marsh’s goal looks quite realistic and achievable.
The lower-than-expected revenue in Q1 was largely because Plug Power delayed revenue recognition of 419 GenDrive units it shipped in the January-March quarter. The Latham, New York-based company recorded $46 million bookings in Q1 that will become revenue later. Plug Power expects bookings of over $200 million in the current fiscal year, and Q1 bookings were in line with that goal.
How will Plug Power reach $500 million?
Andy Marsh said the $500 million estimated revenue figure included $260 million in baseline sales, about $100 million revenue from hydrogen sales and recurring services, $80 million in new customer sales, and $60 million from international markets. He added that Plug Power’s gross margins would also improve to 35% from negative 22% in Q1, 2015.
Plug Power is planning to get into the hydrogen generation market, which would complement its fuel cell business. What’s more, the company has been pushing beyond forklifts to explore new markets. The fuel cell maker is doing a test with FedEx to roll out ground support equipment (GSEs) including baggage loaders, aircraft tuggers, and auxiliary power units.
Plug Power faces little competition
Earlier this year, the company inked a multi-year contract with SouthernLINC to provide ReliOn power backup systems and GenFuel hydrogen services to ensure continuous connectivity for SouthernLINC’s customers. It has also started producing fuel cells for refrigerated trucks. Further expansion in these areas would help Plug Power meet its goal of $500 million revenue.
A big plus for Plug Power is that it has no major competition. Hyster-Yale acquired Nuvera Fuel Cells last year to strengthen its fuel cell business. But the acquisition would require a heavy R&D investment to develop a viable alternative to GenDrive, which would take a lot of time. Plug Power has a solid head-start in the fuel cell market.