Octopus limits losses as customer base triples
Challenger energy supplier Octopus more than tripled its customer base in the last financial year, growing from 199,000 to 691,000 households by April 2019.
The company, which now has over 1.4m customers, also increased its revenue by 256 per cent to £460m in the same period, today’s annual results showed.
Notably, considering its rapid growth, the challenger brand only reported a £30m loss for the year, and expects to approach break-even this year.
Chief executive Greg Jackson said that this would come “significantly earlier than previously expected”, telling City PM that the loss was largely the result of absorbing wholesale energy cost increases to protect customers, as well as marketing for rapid customer growth.
He added that the company would now look to “relentlessly invest” in scaling up its business model and continuing its investment in tech.
Octopus’ technology platform Kraken already allows the lowest cost-to-serve of any large supplier, and the firm will be looking to fully automate all of its processes in order to free up time for customer service.
Its losses compare favourably with those of direct rival Bulb, which has scaled up at a similar rate but fell to a £129m loss last year, according to Companies House filings.
Earlier this week the firm bought Engie’s 70,000 strong UK business after the French supplier decided to quit the UK household energy sector.
The move was the third of this kind in recent years, with Octopus having already taken on 90,000 suppliers from failed firm Iresa Energy and 20,000 from Affect Energy.
Jackson said that the firm would likely continue to pursue acquisitions on this scale, rather than mimicking new SSE retail owner Ovo, as to make such deals economically viable would involve hiking prices to match those of the incumbents.
Instead, he said, the firm would pursue growth through “aggressively targeting the marketplace” through its lower pricing.
Octopus also said it would look to continue its international expansion, having already moved in to Australia and Germany.
Within 18 months, Jackson said, the firm will be looking to open up in four or five different countries as a starting point to becoming the world’s first truly global energy company.
This morning’s annual Which? customer satisfaction survey ranked the firm the top UK energy supplier for a second year in a row.
The challenger, which began trading in 2016, improved its customer satisfaction score to 83 per cent.
Octopus is backed by Octopus Group, a financial services and energy firm, which manages
more than £8.6bn of funds.